Business confidence at second highest level since start of pandemic

With the majority of firms planning to bring back more than half of their furloughed staff, latest figures show that business confidence in October was at its second-highest level since March 2020.

The latest Lloyds Bank Business Barometer revealed that despite confidence taking a slight dip from September (with the main factor being due to a fall in optimism about the wider economy), it still remains well above the long-term average.

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.”

Looking at a regional analysis, five out of the twelve UK regions and nations registered an increase in business confidence this month. London (up three points to 65%) and the North East (unchanged at 61%) remain the most positive regions.

With regards to individual sectors, manufacturing remained strongest, 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).

Retail and services fell slightly to 37% (down five points from 42%) and 43% (down four points from 47%) respectively, however, they remain higher compared to three months ago.

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, added, “There has been some fluctuation in confidence recently due in part to the supply-chain pressures facing firms. However, it is promising to see the majority of regions and nations have seen an uptick in confidence over the last three months.

“Manufacturing confidence continues to rise through positive trading and employment prospects, and we hope that this cadence follows into other sectors.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.