Business confidence in Wales tumbled in October, according to latest research from Lloyds Bank Commercial Banking.
Companies in Wales reported lower confidence in their own business prospects month-on-month, down 15 points at 27%. When taken alongside their optimism in the economy, down 29 points to 21%, this gives a headline confidence reading of 23% – the lowest of any nation or region of the UK.
A net balance of 16% of businesses in the Wales expect to increase staff levels over the next year, down eight points on last month.
Amanda Dorel, regional director for Wales at Lloyds Bank Commercial Banking, said: “The drop in confidence among Welsh businesses is concerning but reflects some of the uncertainty in the trading environment that firms are facing. Encouragingly, though, overall confidence remains in positive territory, with plenty looking to hire.
“Whatever happens, we will support firms across the country for the remainder of the year as part of our ongoing commitment to helping Britain prosper.”
Overall UK business confidence remained steady month-on-month, dipping by just three points to 43% and remaining comfortably above the year-to-date average of 26%. Hiring intentions were unchanged on September’s reading at 37%, while firms’ optimism in the economy (down four points to 44%) and confidence in their business prospects (down one point to 42%) were down marginally.
All UK nations and regions reported positive confidence readings for the seventh consecutive month. Firms in London (up three points to 65%), the North East (unchanged at 61%) and the East Midlands (up eight points to 55%) had the highest confidence readings, while businesses in the South East (down 11 points to 21%).
From a sector perspective confidence remained strongest in manufacturing, rising to a five-month high of 51% (up two points from 49%) with trading prospects being particularly positive (60% expecting stronger activity in the year ahead). Additionally, 68% of manufacturing firms are planning on bringing all furloughed staff back which is more than any other sector. However, these firms are also less likely to say it is easier to find people with the right skills and experience.
Business confidence in retail and services fell slightly to 37% (down five points from 42%) and 43% (down four points from 47%) respectively, although they remain higher than three months ago. 59% of firms in both retail and services expect all their furloughed staff to return, less than in manufacturing. Additionally, higher proportions of firms said that it is becoming easier to hire people with appropriate skills and experience proportions (46% in retail and 53% in services, compared with 41% in manufacturing).
Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, said: “While economic optimism saw a slight dent in October due to rising costs and the on-going supply chain issues, it is clear that firms are still feeling relatively buoyant as overall business confidence remains high and above the long-term average.
“With 60% of firms saying that they expect to bring all their furloughed staff back to work, and a further 30% intending to bring back more than half, it should bode well for the labour market as we head into the winter.”