Cautious Optimism Returns for Welsh Businesses

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Business confidence in Wales rose two points during October to 2%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

However, companies in Wales reported a lower confidence in their business prospects at 7%, which along with their views on the economy in general gives an overall confidence of 2%.

Businesses’ hiring intentions showed that a net balance of 8% of businesses in the region expect to hire more staff during the next year, down one point on last month.

Across the UK, overall confidence rose four points to 6% as firms’ confidence in their own prospects climbed two points to 15%.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide. This month’s survey was conducted before the government announced its new deal on the UK’s departure from the EU.

Amanda Dorel, regional director for Wales at Lloyds Bank Commercial Banking, said:

“Although ongoing uncertainty is challenging for businesses, it is heartening to see that firms across Wales are beginning to regain confidence and the balance are optimistic for the future.

“We know that Welsh businesses are entrepreneurial and resilient, and we will continue to support them through the times ahead.”

Across the region, a net balance of 12% of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, up two points from September.

National overview

Businesses in the West Midlands showed the most confidence, at 16%, ahead of the South West at 15%, and East Midlands (13%).

Those in Scotland were the least confident, with an overall confidence of -3%, nine points below the national average.

Meanwhile, overall business confidence improved in all four broad sectors, with the largest increases being in the construction sector, which rose eight points to 18% and the manufacturing sector, which increased seven points to 5%.

Despite confidence in the services sector rising for the first time since June, by three points to 0%, overall confidence remained the weakest in this sector, while confidence in the retail sector saw a small increase of one point to 15%.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said:

Both business confidence and optimism about the wider economy have picked up this month, with economic optimism reaching a three-month high as concerns about the impact of the UK leaving the EU eased. However, there was a slight step down in hiring intentions, which could reflect concerns about ongoing economic uncertainty.”