The Lloyds Business Barometer has recently found that UK business confidence fell in November, with the index reportedly sliding three points to 41%.
Above the long-term average of 29%, the notable change followed a period of sustained “positivity” from UK based businesses, as confidence reached the highest level “reported since 2015 during May, July and August this year.”
The Business Barometer, which surveys 1,200 businesses monthly and which has been running for more than 20 years since 2002, provides early “signals about UK economic trends both regionally and nationwide.”
Businesses were asked about their optimism in the wider economy as well as their own trading prospects, with results “indicating relatively positive sentiment.”
Despite indications of uncertainty in the wider environment, trading prospects “continued to be resilient.”
Although more than half of all respondents (52%) were more “optimistic about the economy than three months ago, 26% felt less positive – up from 20% in October.”
As mentioned in the report, the overall result for economic optimism “fell 9 points to 26%.”
According to the latest report, UK based businesses did, however, demonstrate more “positivity in their own trading prospects.”
Only 8% of firms said they expected less “activity in the coming year, while 63% predicted more. As a result, the overall score for trading prospects in November rose to 55%.”
Although hiring intentions reduced for the third time in four months, over half of all business-owners “expected to increase the number of employees on their books.”
52% of respondents had plans to increase the “size of their workforce, three times the number of businesses expecting to downsize (17%).”
Despite a moderate reduction, expectations around pay are still “elevated in comparison to the last four years.”
As stated in the update, the number of businesses that expected “wage growth of 3% or more fell for the third month in a row (30%). Similarly, the proportion of businesses expecting at least 4% pay growth dipped to 16% – a four-month low.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said:
“In November, the overall confidence metric fell by 3 points for the third month running. This is the lowest level since June, but still above the survey’s long-term average, which is ultimately positive from a longer-term perspective.”
Overall, these results show that businesses are “still positive and feeling resilient, albeit with tempered views on the economic outlook.”
Slightly fewer businesses plan to increase prices in the coming months.
63% of respondents said they expected the “costs of their goods and services to increase (down from 64%), while a further 3% expected to lower them.”
These results still indicate that the breadth of businesses expecting to “raise their prices remains above pre-pandemic levels.”
Paul Kempster, MD for Relationship Management, Lloyds Business & Commercial said that it is clear that businesses are feeling confident in themselves, “evidenced by their buoyant trading prospects, which is great news for the UK.” Kempster added that there has “been an improvement in manufacturing – for the first time in four months – as well as construction and services which is welcome news, considering our sectors can play a huge role in boosting economic growth.”
Despite a fall in some of the regions, the update noted that it it is encouraging to see “resilience elsewhere.”