South West businesses plan to increase recruitment in the coming year despite a dip in confidence, according to the latest Business in Britain report from Lloyds Bank.
Business confidence in the South West – calculated as an average of respondents’ expected sales, orders and profits over the next six months – fell to 19 per cent compared with 27 per cent in July 2017.
However, the net balance of firms looking to hire more staff rose by 21 points to 17 percent, compared with July 2017, while the net balance of businesses expecting to increase investment held firm at five percent.
And the net balance of businesses looking to increase staff pay in the next six months rose by 12 points to 24 percent.
Yet the region still faces challenges, with the share of firms that continue to report difficulties hiring skilled labour falling 10 points but remaining relatively high at 47 per cent.
The Business in Britain report, now in its 26th year, gathers the views of more than 1,500 UK companies, predominantly small to medium sized businesses, and tracks a range of performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.
Across the UK, the South West was among the least confident regions at 19 per cent. Business confidence was highest in the North East (38 percent) and North West (31 percent), while the lowest level of confidence was in Yorkshire and the Humber (15 percent), followed by Scotland (17 percent).
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking, said: “Despite a slight dip in confidence, firms in our region have their sights firmly set on job creation and, encouragingly, wage growth, too.
“Firms are still facing challenges in the form of economic uncertainty and weaker domestic demand, which are two of the key obstacles stunting growth across the South West.
“While the Brexit negotiations continue, businesses are focused on short term threats – including managing higher costs and maintaining positive cash flow - so that they can prepare for whatever 2018 brings."
Nationally, business confidence was highest in manufacturing, while sectors more dependent on domestic demand, such as hospitality, leisure, and retail and wholesale also recorded gains.
The only sector that reported a significant fall was construction, in which confidence dropped from 31 percent to 14 percent.