Business confidence in the North West was the lowest in the UK in December, despite rising 15 points month-on-month to -13%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
North West firms’ optimism towards the economy increased 19 points month-on-month to -12%, while confidence in their own business prospects rose 14 points on November’s reading to -12%. Together, this gives a headline confidence figure of -13%.
Businesses’ hiring intentions showed that a net balance of 15% of businesses in the region expect to reduce staff levels over the next year, down 14 points on 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 saw its largest monthly increase for more than four years in December, following vaccine progression announcements. Confidence climbed by seventeen points to -4% in November to -4%. Economic optimism jumped 23 points to -5%, while firms’ confidence about their trading prospects increased 11 points to -3%.
All 12 UK nations and regions saw a rise in overall confidence during December. The most marked improvements were reported in Scotland (up twenty-nine points to -9%); the South West (up twenty-two points to 5%) and the West Midlands (up twenty-two points to 4%). The North East, South West and West Midlands all moved into net positive territory for the first time since March this year.
Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “With the deployment of a vaccine underway and a viable Covid-19 exit strategy beginning to take shape, confidence has risen in the North West with a smaller share of companies expecting to reduce headcounts month-on-month.
“But challenges are clearly still weighing on the outlook of the region’s firms. No matter what the coming months may bring, we’ll continue to be by the side of businesses in the North West, providing the guidance and support they need as we head into the new year, and beyond.”
In the industry sectors, confidence reached the highest levels seen since the start of the pandemic. Manufacturing reported a strong rebound this month despite looming uncertainty during the survey period about the UK’s new trading arrangements with the EU, surging by twenty-five points, from -25% to 0%. This was followed by a growth in confidence for construction, which rose by eighteen points to -5% services, which jumped by sixteen points to -5% and the retail sector which reported an 11 point lift in confidence to -1%. Nevertheless, entering the holiday trading period, confidence in retail, as in other sectors, remains below the long-term average.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “The news of the vaccine progress has bolstered this month’s confidence figures, more than offsetting uncertainties around the UK’s new trading relationship with the EU. While confidence remains below average and significant challenges lie ahead, it is heartening to conclude a challenging year with a notable improvement in business sentiment and with the positive momentum hopefully continuing into 2021.”
