Business confidence in Wales fell eight points during October to -12%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in Wales reported higher confidence in their own business prospects month-on-month at -5%.  When taken alongside their views of the economy overall, which fell by 19 percentage points, this gives a headline confidence reading of -12%.

When it comes to businesses’ hiring intentions, a net balance of 9% expect to reduce staff levels over the next year. This compares to a net balance of 4% that had expected to hire more staff last month.

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

Across the UK, overall confidence dropped seven points month-on-month to -18%. While confidence about businesses’ own trading prospects dipped by only one point, their optimism in the economy fell by 14 points. UK business confidence has remained in negative territory since April, but the picture had been improving until October, with confidence steadily rising since May.

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

“The recovery in business confidence that we saw through the end of the summer and into September appears to have been short-lived. Optimism among business owners has become almost inextricably linked with the spread of Covid-19 as it continues to hamper their ability to trade effectively. It’s a tough time for Wales’ many brilliant businesses.

“With further turbulence expected this winter, we remain by their side through the crisis.”

National overview

The North West had the highest confidence in October at -2%, followed by the East of England (-8%), and North East (-10%). Meanwhile, optimism fell 21 points in Yorkshire to -29%, making it the least confident UK region.

In the industry sectors, services slipped back, with confidence declining by fourteen points to -24% . The decline was driven by hospitality and arts and leisure grappling with the implications of recently introduced measures to tackle the pandemic. Manufacturing and retail logged modest improvements, up three points to -15% and up one point to -7% respectively.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said:

“The resurgence in coronavirus cases and the reintroduction of local lockdown measures saw overall business confidence fall back sharply this month. Added to that are ongoing uncertainties regarding new trading arrangements with the EU in January. All of this makes the economic outlook uncertain and the period ahead will be pivotal for businesses as they navigate the winter months and continue to adapt to the evolving landscape.”