Business confidence in the North West fell 17 points during February to 31%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the North West reported lower confidence in their own business prospects month-on-month, down 13 points at 39%. When taken alongside their optimism in the economy, down 19 points to 23%, this gives a headline confidence reading of 31%.
North-West businesses identified their top target areas for growth in the next six months as evolving their offer (44%), investing in their team (38%), and investing in sustainability measures to decarbonise their operations (30%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 25% of businesses in the region expect to increase staff levels over the next year, down 9 points on last month.
Overall UK business confidence decreased by just one point to 21% in February. Firms remained positive about their own trading prospects with a net balance of 31% expecting business activity to increase in the coming 12 months.
Firms also reported plans to create new jobs with 20% of businesses intending to make new hires over the next 12 months – up three points from January.
All UK regions and nations reported a positive confidence reading in February, with six areas reporting a month-on-month increase in confidence. Of those, the West Midlands (up 30 points to 48%) and Yorkshire and Humber (up 22 points to 34%) saw the largest monthly increases.
Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “Despite economic headwinds, confidence among North West firms remains positive, and many business leaders hold a cautiously optimistic view about their future prospects.
“While challenges such as rising prices can be tough to navigate, there are tools to help. Business that use resources to effectively manage their working capital and have a long-term view on order books will be best place to forecast for the future and unlock the funding to pursue growth opportunities.”
Retail confidence bounced back, rising for the first time in three months to 21% (up 14 points), led by improvements in both trading prospects and economic optimism. However, business confidence fell in construction (down eight points to 19%) and services (down five points to 20%) although this remains higher than in the latter part of 2022.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence has lost a little momentum this month, following the strong gains seen recently. Firms are feeling more cautious about the wider economy. However, confidence in their own trading prospects continues to strengthen, helped by tentative signs that wage and other cost pressures may be reducing.
“While inflation appears to be tapering, pressures on consumers will need to ease further to help make it a more stable environment for businesses to operate.”
