Business confidence in Wales fell 18 points during August to minus two per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in Wales reported lower confidence in their business prospects, which fell three points to eight per cent. Taken together with the view on the outlook for the economy, this gives an overall confidence of minus two per cent.
Businesses’ hiring intentions showed that a net balance of two per cent of businesses in the region expect to hire more staff during the next year, down eight points on last month.
Across the UK, overall confidence slipped to one per cent, as businesses became less optimistic towards the economic outlook, while confidence in their own prospects fell to eight per cent.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Amanda Dorel, regional director at Lloyds Bank Commercial Banking, said:
“In the current economic climate, it is understandable that businesses have had a knock in confidence and are cautious about the outlook for the year ahead.
“Through these challenging times, we’re working by the side of local businesses and have pledged £1.1 billion to Welsh firms this year alone, providing companies with the tools and guidance they need to flourish and grow.
“This support should provide a much-needed confidence boost to businesses of all sizes across Wales, helping to strengthen the local economy.”
Across the region, a net balance of 15 per cent 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, down four points on a month ago.
Businesses in the West Midlands showed the most confidence, at 15 per cent, ahead of the South West (11 per cent) and London (seven per cent).
Those in Scotland were the least confident, with an overall confidence of minus nine per cent, 10 points below the national average.
In August, business confidence in the construction sector rose by six points to 12 per cent. Meanwhile, overall confidence fell by 16 points to three per cent in the manufacturing sector, and by 11 points to six per cent in retail, the lowest levels seen for those sectors this year.
Confidence was also down 15 points to minus three per cent in the services sector, bringing it near to the February low of minus four per cent.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said:
“We have seen a dip in overall business confidence this month, with firms appearing less positive about their own trading prospects and the broader economy, and remaining low against the historic average.
“While ongoing economic uncertainty is likely a key driver, it’s worth noting that companies’ assessment of the expected impact on their business of the UK leaving the EU has remained broadly unchanged this year.”