Welsh business confidence reached its highest level of the year so far in May, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in Wales report higher confidence in their business prospects at 28 per cent and higher economic optimism at nine per cent. Together, this gives an overall confidence of 19 per cent. This is the highest level seen in Wales during 2019 and the third highest confidence reading in the UK this month.
This more upbeat outlook is also reflected in hiring intentions, with a net balance of 25 per cent of businesses in Wales now reporting they expect to hire more staff during the next 12 months, up 11 points on last month.
Across the region, a net balance of 10 per cent of businesses say they feel that the UK’s exit from the European Union is having a negative impact on their expectations for business activity, down three points on a month ago.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
David Beaumont, regional director for Wales at Lloyds Bank Commercial Banking, said:
“It’s extremely encouraging to see that confidence among businesses across Wales has sprung back following the dip we saw last month. The fact that more are expecting to make hires in the coming months is further evidence that the region’s businesses are taking an assured approach towards their growth plans.
“For firms to realise their ambitions and grow sustainably, it’s important that they have access to the right support. That’s why we’re working side by side with local businesses and have pledged £1.1 billion to help businesses in Wales prosper.”
Across the UK, overall confidence slipped four points to 10 per cent as firms’ confidence in their own prospects fell six points to 17 per cent, while their economic optimism dropped two points to two per cent.
Ahead of Wales in the overall business confidence rankings this month is Yorkshire and the Humber (23 per cent) and the West Midlands (21 per cent). Business confidence in the East Midlands is, like Wales, sitting at 19 per cent. Meanwhile, those in the East of England are the least confident, with an overall confidence of minus six per cent, 16 points below the national average.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said:
“Overall business confidence continues to sit below the long-term average. A slight dip in confidence this month appears largely to reflect companies’ assessment of their own trading prospects for the coming year, and the anticipated impact of the UK leaving the EU.
“It’s encouraging to note that while we are seeing uncertainty impacting business confidence overall, optimism regarding the wider economy remains broadly steady.”
Rise in manufacturing confidence
Confidence rose among manufacturing businesses for the second consecutive month, up 5 points to a four-month high of 21 per cent. The sector was the most confident in both trading prospects and economic optimism.
The services sector continued to report the weakest overall confidence (down five points to seven per cent), reflecting firms’ more negative economic optimism and the expected impact of the UK leaving the EU. Confidence also fell in construction (down three points to 12 per cent) and retail (down five points to 11 per cent).