Business confidence remains above average despite November decline

Business confidence fell across most of the country according Lloyds Bank’s November Business Barometer, however optimism in the economy remains high and above the long term average.

The monthly business survey from the high street bank found that declines in firms’ own prospects led to the overall slip in confidence of three percentage points to 40% in November; despite the drop, business confidence still remains well above the long-term average of 28% recorded by the Business Barometer. Wales and the South East were the only UK regions to record growth in optimism, with the retail sector also bucking the wider trend this month and raising hopes for a strong Christmas trading season for the high street.

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: 

November has been a challenging month for businesses’ confidence in many of the regions, however, it is pleasing to see such significant rises for Wales and the South East.

“Retail confidence bucked the trend in November in preparation for the festive period – our hope is that this is repeated across other sectors.”

Hiring intention data also showed a decline to its lowest levels since the furlough scheme ended; however, 48% of businesses still expressed plans to recruit over the next 12 months. Businesses also turned to wage increases in a bid to retain and attract workers, with a quarter of firms expecting pay to grow by 3% or month.

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

“Business confidence remains robust above the long-term average, but it dipped this month as economic optimism and trading prospects were affected by the persistence of rising costs and supply chain issues. 

“Pay expectations remain elevated with a quarter of businesses anticipating rises of 3% or more in the next 12 months which will add to business costs, but it bodes well for staff facing into economic challenges.”

The Business Barometer results provide early signals about UK economic trends. The survey started in January 2002 and research is carried out monthly on behalf of Lloyds Bank by BDRC Continental. In November, 1,200 companies were surveyed, representing all UK regions and sectors. Fieldwork was carried out between 1st and 15th November, ahead of the introduction of measures in light on the emergence of the Omicron Covid-19 variant.