Business confidence in Wales rose 14 points during the beginning of June to 32%, 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, up 13 points at 41%.  When taken alongside their optimism in the economy, up 17 points to 24%, this gives a headline confidence reading of 32%.

Welsh businesses identified their top target areas for growth in the next six months as evolving their offer 33%, investing in their teams 29% and diversifying into new markets 26%.

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

A net balance of 28% of businesses in the region expect to increase staff levels over the next year, up 36 points on last month.

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Overall, UK business confidence increased by nine points to 37% in June, with all regions reporting a positive confidence reading. Eight out of 10 regions reported a higher confidence reading than in May.

The East Midlands reported the highest levels of business confidence at 52% (up 35 points on last month), the highest level of any UK region or nation this year. Scotland reported the second highest confidence reading at 50% (up 28 points month-on-month), followed by the North East at 47% (up 12 points month-on-month) and Yorkshire at 45% (up 26 points month-on-month). London and the South West were the only regions to report a decline in confidence. In London confidence fell by 10 points to 33%, while in the South West it fell by one point to 29%.

Business confidence for firms in the service sector rose to 37% (up 11 points), the highest seen since February 2022. With the recent spell of good weather and a reduction in food and energy prices, businesses in leisure and hospitality may be able reap the rewards in the months to come.

Manufacturing firms’ confidence also increased to its highest level since early 2022, rising to 50% (up 10 points) to outperform other sectors.

Dave Atkinson, regional director for Wales at Lloyds Bank Commercial Banking, said:

“It’s fantastic to see business confidence in Wales performing so well. Firms have clearly set their sights on growth with many planning to invest in new products and services which could have a fantastic impact on the Welsh economy.

Firms that invest in their team, by increasing their overall headcount or by prioritising training for their current colleagues will likely reap the rewards. As always, we’ll remain by the side of Welsh businesses to help them achieve their growth ambitions.”

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

“It’s encouraging to see business confidence rebounding following last month’s five-point dip to 28%. Trading prospects and optimism have seen a resurgence this month with overall confidence up in all but two of the twelve regions of the UK, which shows positive prospects across the wider economy.

However, interest rate rises and cost pressures are still felt by many and we await to see the impact of the latest 50 basis point rise in the base rate. Meanwhile, expectations for average pay growth, although down slightly this month, appear to have picked up compared with the start of the year and remain elevated relative to pre-pandemic levels.”