Business confidence in the North West fell five points during October to 42%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported lower confidence in their own business prospects month-on-month, down three points at 47%. When taken alongside their optimism in the economy, down nine points to 36%, this gives a headline confidence reading of 42%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
A net balance of 47% of businesses in the region expect to increase staff levels over the next year, up eight points on last month.
Overall UK business confidence remained steady month-on-month dipping by just three points to 43% and remaining comfortably above the year-to-date average of 26%. Hiring intentions were unchanged on September’s reading at 37%, while firms’ optimism in the economy (down four points to 44%) and confidence in their business prospects (down one point to 42%) were down marginally.
All UK nations and regions reported positive confidence readings for the seventh consecutive month. Firms in London (up three points to 65%), the North East (unchanged at 61%) and the East Midlands (up eight points to 55%) had the highest confidence readings, while businesses in the South East (down 11 points to 21%) and Wales (down 23 points to 23%) had the lowest overall confidence levels.
Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “Despite the decline in October, business confidence in the region is just one percentage point below the UK average.
“While confidence has dipped, hiring intentions have increased. This is hugely encouraging at it shows the resilience and long-term planning being undertaken by businesses – an essential approach as we continue to adapt and adjust to the current supply chain disruption.
“As we move into the final months of 2021, we’ll continue to be by the side of firms across the region and support them as they look to take advantage of upcoming growth opportunities.”
From a sector perspective confidence remained strongest in manufacturing, rising to a five-month high of 51% (up two points from 49%) with trading prospects being particularly positive (60% expecting stronger activity in the year ahead). Additionally, 68% of manufacturing firms are planning on bringing all furloughed staff back which is more than any other sector. However, these firms are also less likely to say it is easier to find people with the right skills and experience.
Business confidence in retail and services fell slightly to 37% (down five points from 42%) and 43% (down four points from 47%) respectively, although they remain higher than three months ago. 59% of firms in both retail and services expect all their furloughed staff to return, less than in manufacturing. Additionally, higher proportions of firms said that it is becoming easier to hire people with appropriate skills and experience proportions (46% in retail and 53% in services, compared with 41% in manufacturing).
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “While economic optimism saw a slight dent in October due to rising costs and the on-going supply chain issues, it is clear that firms are still feeling relatively buoyant as overall business confidence remains high and above the long-term average.
“With sixty percent of firms saying that they expect to bring all their furloughed staff back to work, and a further thirty percent intending to bring back more than half, it should bode well for the labour market as we head into the winter.”