Business confidence in the United Kingdom reportedly rose “to 42% in November, a three-point increase, to reach the highest level since February 2022, before the energy crisis which followed the outbreak of the war in Ukraine.”
The rise in business confidence in the UK is significantly “above the long-term average of 28%, and has been driven by increased trading prospects for the year ahead, greater optimism in the economy and more companies expecting to hire staff.”
The increase in November followed “a three point rise in October, a sharp contrast to the 15% business confidence figure we say in October 2022.”
The Barometer survey, which was “conducted before the Chancellor’s Autumn Statement on 22 November, shows firms’ trading prospects were up this month with 56% (up two points) of businesses anticipating stronger activity in the next 12 months, compared with 8% (down two points) expecting weaker outcomes.”
This resulted in the net balance rising “to a near six-year high, four points to 48% versus 44% in October. The last time the trading prospects net balance reached 48% was in December 2017.”
Optimism about the wider economy “also increased, with 57% (up one point) of firms reporting greater optimism, while 19% (down two points) were less upbeat. The net balance therefore rose three points to 37% compared to 34% in October.”
Employment insights
Companies’ hiring intentions reached “the highest levels for 18 months, with the net balance of companies expecting to raise their staffing level up three points to 35%. This further builds on the gains seen in October (32%, up seven points) which followed a seven-point fall in September.”
The proportion of firms planning to “increase their headcount rose to 51% (up three points), while an unchanged 16% expect to reduce the number of employees. Hiring intentions continue to remain stronger than at the start of the year which saw a net balance figure of 17%, against 35% this month, as firms prioritize retaining and attracting staff.”
Expectations for average wage growth “took a slight fall with 30% of companies (down one point) expecting pay growth of 3% or more, and 18% (also down one point) expecting at least a 4% growth.”
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said:
“Business confidence rising to a 21-month high shows the resilience of UK companies, as both trading prospects and economic optimism continue to rise. It’s encouraging to see signs that wage expectations may be stabilising, even against the backdrop of hiring intentions increasing to an 18-month high. Price indicators in the survey are similarly up, with our data continuing to show that firms are still safeguarding their profit margins in response to past rises in interest rates, wage increase pressures, and the prospect of higher energy prices again this winter. Our next survey in December will reveal how firms are digesting the measures announced in the Chancellor’s Autumn Statement last week as they navigate the busy festive season and make plans for 2024.”
Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial Banking said:
“Last month showed strong performance across a number of sectors, with the services industry showing material gains as confidence reached the highest level since September 2021. We’ve also seen a real turnaround in sentiment for manufacturers, with business confidence at a five-month high, reflecting the expectation among many firms that interest rates have now peaked and may begin to fall next year.”
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