Wales Business Confidence Dips Slightly in June

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Business confidence in Wales fell six points during June to 21%, according to the latest Business Barometer from Lloyds Bank Commercial Banking. 

Companies in Wales reported lower confidence in their own business prospects month-on-month, down eight points at 20%. When taken alongside their optimism in the economy, down four points to 22%, this gives a headline confidence reading of 21%.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

When it comes to jobs, a net balance of 5% of businesses in the region expect to increase staff levels over the next year, down three points on last month.

Overall UK business confidence remained steady month-on-month at 33%. Firms reported a small increase in their business prospects, up two points to 30%, the highest reading since September 2020. Confidence in the economy dipped marginally by two points to 36%.

Across the UK all regions and nations reported positive confidence readings for the third consecutive month. Businesses in Scotland (up 27 points to 42%), London (up 17 points to 41%) and the East of England (up ten points to 36%) reported the highest increases in overall confidence.

While confidence remained positive, firms in eight regions reported a month-on-month drop. The biggest decreases were in Yorkshire and Humber (down 14 points to 30%), the West Midlands (down 12 points to 29%), the North West (down nine points to 29%) and East Midlands (down nine points to 31%).

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

“Despite firms expecting a delay to a total easing of restrictions, business confidence in Wales has remained comfortably in double digits for a second month.

“There is no doubt that the country’s leading hospitality and tourism sector is eager to reopen at full capacity as soon as possible and the world-leading vaccine programme is giving hope that this could be just around the corner.

“We will be by the side of businesses here in Wales during the month ahead and beyond as part of our ongoing commitment to supporting Britain’s recovery.”

The majority of responses were given before the various UK governments formally announced the delay to the removal of all limits on social contact, which was originally expected to happen on 21st June in England and close to that date in other parts of the UK. However, it is likely that anticipation of the delay may have had a small negative impact in confidence particularly in the retail sector (down eight points to 36%) while manufacturing also fell (down 18 points to 35%). Despite this, confidence remains at historically high levels across the broad industry sectors – in part due to services increasing by five points (31%) to its highest level in more than three years and construction remaining steady at 35%.

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

“A fifth consecutive monthly increase in trading prospects and employment expectations highlights the resilience of UK businesses as they continue to recover from the challenges presented by the pandemic. Although we must now wait slightly longer for the last remaining COVID-19 restrictions to ease, it’s an encouraging sign that firms continue to have strong overall confidence in the outlook for the UK economy, as well as their expectations for their own growth prospects.”