North West Business Confidence Falls In April

Business confidence in the North West fell seven points during April to 36%, 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 seven points at 48%. When taken alongside their optimism in the economy, down seven points to 24%, this gives a headline confidence reading of 36% (vs. 43% in March).

North West businesses identified their top target areas for growth in the next six months as evolving their offering with new products and services (39%), introducing new technology (28%) and investing in their team, including hiring new staff and investing in training (28%).

A net balance of 36% of businesses in the region also expect to increase staff levels over the next year, up 13 points on last month.
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

National picture

Overall UK business confidence held steady at 42% in April, the same level as recorded in March and February.

While firms’ confidence in their own prospects dipped marginally by four points to 45%, their confidence in the economy rose by four points to 39%. Meanwhile, the net balance of companies planning to increase staff levels over the coming 12 months climbed six points to 33%.

The East of England was the most confident UK nation or region in April (56%), followed by the Wales (51%) and the North East (46%).

Sector Insights

Businesses in the manufacturing sector reported increased confidence this month, recording an increased score of 45% (up 4 points) which is the highest level for 3 months. Similarly, confidence among firms in the services sector (42%) and construction (41%) also improved, largely driven by greater economic optimism.
In retail, confidence pulled back slightly from last month’s strong showing to 40%, illustrating that confidence in this sector remains fragile. Retail is also more liable to be impacted by external factors sectors other sectors do not face into, such as the poor weather.

Jenny France

North West firms’ confidence is yet to find a stable footing this year, registering two months of growth and two months of decline. This in itself shouldn’t create cause for concern – inflation is falling, but more slowly than hoped, for example, and business confidence could simply be reflecting a shifting economic landscape.

But, while these factors do have a bearing on how firms plan to invest in growth, North West firms have an opportunity to mitigate them. Establishing a healthy cashflow and strong levels of working capital is key. And discounted financing is also available for sustainable investments, such as our Clean Growth Finance Initiative, which is helping businesses to introduce the green measures that will reduce their impact on the environment and fuel growth.

Hann-Ju Ho

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said:

“We are beginning to see a consistent trend emerge from our Barometer results in recent months. Businesses are feeling increasingly confident about the economy, coinciding with falling inflation and hopes that interest rates will start to fall this year.

“There continues to be a mixed picture among the regions, with the biggest rises seen in Wales and the South West. The strongest confidence was reported in the East of England, with confidence rising for the third consecutive month. Confidence in the North East eased slightly but remained strong in April.

“The second quarter of 2024 has started brightly for businesses, and we are seeing firms expressing greater confidence in an enduring economic recovery.”