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Optimism in British companies has reached its highest level in over seven years, according to a survey by Lloyds Bank.
The bank’s Business Barometer shows that trading prospects for the next 12 months rose to 56% in July, up from 44% in June. This is the highest level since April 2017. The survey also found that optimism about the economy and employment expectations has increased. Confidence has improved among services, manufacturing, and construction companies. The poll also shows that the proportion of companies planning to raise prices has increased, although it remains below the level seen in May.
Lloyds Bank’s latest Business Barometer found that overall business confidence rose significantly in July to equal the highest level in confidence shown by businesses for eight years. Business confidence increased by 9 points to 50% this month, reversing the drop in June and equalling the eight-year high seen in May.
Underpinning July’s strong result was an improved outlook for trading prospects and economic optimism. 62% of businesses reported stronger activity – up from 53% in June – while 6% predicted weaker trading prospects – down from 9%.
Wider economic optimism also rebounded as 62% of respondents – up from 55% in June – felt more positively about the economy while another 17% – up from 16% – felt more negatively.
Similarly, staffing expectations also increased in July. Over half of businesses surveyed (53%) said they planned to expand their workforce, while 14% expected a lower headcount. This meant the net balance rose by 7 points to 39% to equal May’s result – the joint highest level since March 2017.
However, expectations for wage growth were mixed. While the number of businesses expecting to offer employees pay rises of 3% or more increased to 30% (up from 28% in June), this was below May’s level of 37%.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking said “This month shows that businesses are feeling more confident, buoyed by their positive trading prospects and economic outlook. Retail-focused businesses were the main driving force behind the positive rise in trading prospects and these results tally with the improvement we have seen in consumer confidence.
“With the data suggesting that businesses may have taken a more cautious approach in June, next month will be one to watch to see if the renewed sense of optimism continues.”
Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial said “We’ve seen business confidence rebound in July, returning to the level we saw in May. Businesses may be feeling more resilient about their prospects which in the long term can help drive innovation and create jobs across the sectors.
“In retail, we’ve seen the highest level of confidence since the pandemic, which is a positive sign for a sector that has faced several challenges in recent years.We are committed to supporting UK businesses, whatever their confidence levels, providing the resources and guidance they need to thrive and grow.”