Lancashire Times
Weekend Edition
2:00 AM 2nd August 2022

North West Businesses Focus On Recruitment As Confidence Dips

Business confidence in the North West fell 24 points during July to 18%, 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 to 42%. When taken alongside their optimism in the economy, down 40 points to -5%, in negative territory for the first time since January 2021, this gives a headline confidence reading of 18%.

Despite a significant dip in confidence, North West firms identified their top target areas for growth in the next six months as investing in their teams (46%), diversifying into new markets (39%) and evolving their offering with new products or services (38%). The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

A net balance of more than a quarter (26%) of North West businesses expect to increase staff levels over the next year, down 17 points on last month. Overall UK business confidence fell three points during July to 25%. Firms’ outlook on their future trading prospects was up, three points to 37%, but their optimism in the wider economy dropped nine points to 12%. The net balance of businesses planning to create new jobs also decreased, seven points to 21%.

Every UK region and nation reported a positive confidence reading in July, with four out of 11 recording a higher reading than last month. The East of England (up 15 points to 46%), West Midlands (up eight points to 38%) and Wales (up seven points to 30%) saw the biggest increases month-on-month, with the East of England now the most optimistic region overall.

Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “Despite the dip in confidence, firms are continuing to focus on new opportunities for growth, demonstrating that the resilience that has served them well during the last two years is still burning strong.

“At times like this, it’s more important than ever that businesses ensure effective working capital management to help them capitalise on such opportunities as they arise. We will remain by their side, backing their ambition throughout the months ahead.”

Hann-Ju Ho,
Hann-Ju Ho,
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “Business confidence declined this month, suggesting that economic headwinds are becoming more forceful. Despite this, firms’ assessment of their own trading prospects showed some resilience in the face of a challenging environment. Meanwhile, price pressures have shown no clear signs of a downward trend and there appears little sign yet that wage pressures are abating.”

Business confidence declined across all four of the sectors in July, reflecting lower optimism about the economy. Confidence within manufacturing declined the most this month (20%/-12), with firms citing moderating trading prospects and a notable drop in economic optimism, but also issues with inflation and supply bottlenecks. There were small falls in confidence for construction (28%/-2), retail (25%/-6) and services (24%/-1).