Business confidence in the South West grew by 12 points during May to 42 percent, a fourth consecutive month of growth, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the South West reported higher confidence in their own business prospects month-on-month, up 13 points at 39 percent. When taken alongside their optimism in the economy, up 11 points to 45 percent, this gives a headline confidence reading of 42 percent - the highest reading in more than three years.
Only Yorkshire and the Humber has higher confidence levels than the South West.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
When it comes to jobs, a net balance of nine percent of businesses in the region expect to increase staff levels over the next year, up eight points on last month.
Overall UK business confidence rose four points in May to 33 percent, a fourth consecutive month of growth. The reading comes after non-essential retail and hospitality firms reopened their doors to customers. Businesses reported an increase in optimism about their own trading prospects, up two points month-on-month to 28% and their confidence in the economy grew by six points to 38 percent.
Firms’ hiring intentions also rebounded to pre-pandemic levels with 14% of UK businesses expecting to make new hires in the next 12 months, the highest reading since February 2020.
All UK regions reported a net positive confidence reading in May, with almost all areas recording an increase in confidence. Yorkshire and the Humber was the most positive region (up 12 points to 44 percent) followed by the South West (up 12 points to 42 percent) and the West Midlands (up 10 points to 41 percent).
Wales reported the biggest month-on-month increase (up 18 points to 27 percent). Three regions reported small dips in confidence but remained in positive territory: London (down eight points to 24 percent), the North East (down 11 points to 26 percent) and North West (down five points to 38 percent).
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking (pictured), said: “Business confidence is on the rise in the South West and companies are more optimistic about their own trading prospects than they have been in almost two years.
“It’s great to see firms getting back to business, especially the region’s leading tourism and hospitality firms who continue to enjoy the easing of lockdown restrictions as we head into what will hopefully be a busy summer season.
“The past twelve months have been tough but it’s encouraging to see a renewed confidence here in the South West with firms planning on creating more jobs that will ultimately help drive the region’s economy forward in a post-pandemic world.”
From a sector perspective, manufacturing reported the sharpest increase in business confidence (up thirteen points to 53 percent). Construction confidence was up seven points to 35 percent, and retail gained five points to a four-year high of 44 percent with the easing of lockdown measures leading to hopes of stronger business conditions. Wider services confidence posted a more modest rise of one point to 26 percent.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “A fourth consecutive monthly increase in business confidence, and the highest in three years, leaves us hopeful for the UK’s economic recovery. The increase in confidence was buoyed by a further easing of lockdown restrictions and a rise in optimism about the wider economy.
“While we need to wait and see how the months ahead will unfold, the recent rise in positive outlook is an encouraging sign that firms are emerging from the Covid-19 crisis with renewed resilience and vigour.”