Business confidence in Wales rose 12 points during November to 17%, according to the latest Business Barometer from Lloyds Bank Commercial Banking – conducted between 1st-15th November, before the Chancellor’s Autumn Statement announcement on Thursday the 17th November.
Companies in the country reported higher confidence in their own business prospects month-on-month, up 24 points at 36%. When taken alongside their optimism in the economy, down one point to -3%, this gives a headline confidence reading of 17%.
Welsh businesses identified their top target areas for growth in the next six months as investing in their team (35%), evolving their offering (29%), and investing in sustainability (28%).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 16% of businesses in the region expect to increase staff levels over the next year, up four points on last month – the highest reading since May this year.
Overall UK business confidence fell five points during November, but remained positive at 10%. Firms’ outlook on their future trading prospects was down two points to 25%, and their optimism in the wider economy dropped four points to -2%. Despite a seven-point dip, UK businesses remained positive about hiring intentions with 14% of firms aiming to create new jobs in the next 12 months.
All UK regions and nations, apart from the South East, reported a positive confidence reading in November, with seven recording a month-on-month increase in confidence. Of those recording an increase in confidence, Scotland (up 19 points to 24%), Wales (up 12 points to 17%) and the South West (up nine points to 5%) saw the largest monthly changes, with Scotland now the most optimistic overall.
Dave Atkinson, regional director for Wales at Lloyds Bank Commercial Banking, said:
“Despite the economic turbulence of the past few months, it’s good to see firms in Wales confident in their own trading prospects growing as we enter the Christmas period – a vital time for many businesses, especially those in the hospitality and leisure sectors who’ll be hoping for a busy trading season.
“For many businesses, higher costs could make the season more difficult than in previous years. By managing their working capital, Welsh businesses can put themselves in the best possible position to tackle these challenges and any others that come their way.”
Business confidence in retail increased to 15% (up from 9%), perhaps reflecting a renewed confidence in trading prospects ahead of the festive season. However, business confidence in the manufacturing sector fell for the sixth month in a row, to 4%, down 9 points, the lowest confidence level since early 2021. The construction sector held gains made in October, remaining unchanged at 20%, although this level still remains weaker than in the first half of the year.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said:
“Given the recent political and economic landscape, it comes as little surprise that economic optimism and business confidence have fallen this month. Pay growth expectations remain high by historical standards, which could signal ongoing difficulties ahead for businesses to fill vacancies. Looking ahead, it will be interesting to see if the clearer policy picture provided by the Autumn Statement will lead to business confidence moving in a more positive direction as we go into 2023.”