Business confidence in London rose three points during October to 65%, remaining the highest of all UK regions and nations, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the capital reported the same confidence in their own business prospects as in September, with a reading of 59%. When taken alongside their optimism in the economy, up five points to 71% – also the highest in the UK – this gives a headline confidence reading of 65%.
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 62% of businesses in the region expect to increase staff levels over the next year, down two points on September but still the highest of all UK regions and nations.
Overall UK business confidence remained steady month-on-month, dipping by just three points to 43% and remaining comfortably above the year-to-date average of 26%. Hiring intentions were unchanged on September’s reading at 37%, while firms’ optimism in the economy (down four points to 44%) and confidence in their business prospects (down one point to 42%) were down marginally.
All UK nations and regions reported positive confidence readings for the seventh consecutive month. After London, the North East (unchanged at 61%) and the East Midlands (up eight points to 55%) had the highest confidence readings, while businesses in the South East (down 11 points to 21%) and Wales (down 23 points to 23%) had the lowest overall confidence levels.
Becci Wicks, regional director for London at Lloyds Bank Commercial Banking, said: “It’s clear that London businesses continue to be buoyed by emerging from the pandemic and being able to plan for the future, free from the restrictions of recent lockdowns. Like all of us, they will be hoping that the accelerated roll-out of the booster jab prevents any further limitations being put in place as we approach a potentially challenging winter.
“Whatever lies ahead, we will remain by the side of businesses across the capital, providing the funding, advice and support to help them grow.”
From a sector perspective confidence remained strongest in manufacturing, rising to a five-month high of 51% (up two points from 49%) with trading prospects being particularly positive (60% expecting stronger activity in the year ahead). Additionally, 68% of manufacturing firms are planning on bringing all furloughed staff back which is more than any other sector. However, these firms are also less likely to say it is easier to find people with the right skills and experience.
Business confidence in retail and services fell slightly to 37% (down five points from 42%) and 43% (down four points from 47%) respectively, although they remain higher than three months ago. 59% of firms in both retail and services expect all their furloughed staff to return, less than in manufacturing. Additionally, higher proportions of firms said that it is becoming easier to hire people with appropriate skills and experience proportions (46% in retail and 53% in services, compared with 41% in manufacturing).
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “While economic optimism saw a slight dent in October due to rising costs and the on-going supply chain issues, it is clear that firms are still feeling relatively buoyant as overall business confidence remains high and above the long-term average.
“With sixty percent of firms saying that they expect to bring all their furloughed staff back to work, and a further thirty percent intending to bring back more than half, it should bode well for the labour market as we head into the winter.”
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