Business confidence dips from recent highs, while hiring intentions rise
Confidence dipped slightly to a four-month low in October, the latest Lloyds Business Barometer has found.
The survey, which ran from 1st – 15th October, showed that confidence fell three points to 44% in October, its lowest for four months, but remained higher than the long-term average of 29%. The dip followed a period of sustained positivity from businesses. In July and August 2024, confidence reached 50% – the highest level reported since November 2015.
The decline in overall confidence reflects equal falls in firms’ trading prospects and economic optimism. The net balance of optimism towards the economy slipped three points to 35%, the lowest since March. In October, 55% of businesses felt more confident about the economy than three months ago (down from 57%), while 20% were less positive (up from 19%).
This month, firms’ trading prospects pulled back slightly after rising to a year-high in September. The net balance also fell three points to 53%, the lowest result since June. 61% of respondents said they expected stronger activity (down from 63%), while 8% anticipated weaker conditions (up from 7%). More broadly however, long-term trends indicate that businesses continue to signal strong output expectations for the next 12 months.
Employment Insights
The Barometer survey data showed that firms still have positive hiring intentions, picking up marginally from last month. An unchanged 17% said they expected to reduce their workforce within the next year but 54% of respondents (one point increase) said they planned to hire more staff which brought the overall net balance up to 37%.
Pricing Insights
Some businesses also expressed their intentions to raise prices in the next 12 months, albeit a lower proportion than last month. 61% of businesses said they expect to raise their prices (down from 67%), while 3% planned to reduce them (up from 2%).
This indicates that businesses could increase prices in the coming 12 months, rather than the scale of the increase and is not indicative of longer-term pricing.
Sector Insights
Firms’ trading prospects pulled back for the third consecutive month in manufacturing to 46%, the lowest level since March. There were also moderate declines of 3 points in both retail and services to 51% and 57% respectively.
Expectations in construction bucked the trend, rising to 50%.
Paul Kempster, managing director for Relationship Management, Lloyds Business & Commercial said:“While our latest Business Barometer shows a slight dip in confidence, we continue to see resilience and adaptability among UK businesses. At Lloyds, we remain committed to supporting our customers to help businesses continue to capitalise on growth opportunities as we move towards the final quarter of this year”.
Regional Insights
Four of the UK’s 12 regions and nations reported stronger confidence in October.
Confidence in the North East bounced back in October to 63%, pushing the region into the top spot. It is followed by
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “Although overall business confidence dipped in October, it follows a sustained period of significant optimism and business sentiment remains above historical levels. Encouragingly, many businesses remain confident in their own trading prospects, and the increase in hiring intentions suggests more employers want to grow their workforc
“Businesses’ broader economic outlook continues to reflect this rounded picture, and as they move into the final part of the year, they will look to manage these considerations effectively.”
London and the North West, even though optimism for these regions fell slightly. A strong performance in the East Midlands moved it up to fourth place, while lower sentiment in Scotland and Northern Ireland left them at (or near) the UK average.
In the lower half, confidence in Yorkshire & the Humber dipped, while improving in Wales and the East of England. A sharp fall in the West Midlands seemed to be a departure from its recent trend, while there were also declines in the South West and South East.