Business Barometer - Confidence improves from end of 2014

04 February 2015

The Lloyds Bank Business Confidence Barometer ‘monthly snapshot’ for January 2015 shows:

  • Overall business confidence at three month high since September 2014
  • The industrial sector including manufacturing showed the biggest improvement.
  • The Midlands and the South saw increases in overall confidence.

UK companies have started off the New Year with more positive trading prospects following a 17-month low in December according to the latest Lloyds Bank Business Confidence Barometer.

Following signals of weaker sentiment in the final quarter of 2014, the overall balance of firms that were positive about their own future prospects against those that were negative improved eight points to 54 per cent. Almost all of the increase was reflected by a nine point rise in the share of firms that were positive about their trading prospects to 60 per cent, while the proportion of negative responses edged up by only one point to six per cent.

The overall balance of companies who were positive about the economy rose for a third consecutive month, by four points to 49 per cent.  Although the share of companies citing greater confidence decreased one point to 62 per cent, the proportion of companies who were negative about the economy fell five points to 13 per cent.

Overall business confidence in January rose to the highest level since September and above the average for the fourth quarter in 2014, reflecting improvements in both economic optimism and business trading prospects.

TRADING PROSPECTS IMPROVE ACROSS SECTORS

The industrial sector, which includes manufacturing, recorded the largest improvement in overall confidence, with economic optimism and trading prospects increasing 15 and 13 points, respectively. There were smaller increases for the business and consumer services sector with trading prospects up by 2 and 4 points respectively. However the consumer services sector, which includes retail, was the only sector which saw a small 3 point decrease in economic optimism.

REGIONAL PICTURE MIXED

Companies in the Midlands and the South registered strong rises in overall confidence, buoyed in particular by greater economic optimism and by stronger trading prospects. Economic optimism increased 16 and 19 points among firms in the Midlands and the South, respectively, while trading prospects rose five and six points.

The picture was more mixed in the North, where the 12-point rise in trading prospects was more than outweighed by a sharp fall of 34 points in economic optimism. However, this month’s fall in overall confidence in the North comes off the back of strong sentiment at the end of 2014.

STAFFING EXPECTATIONS INCREASE MONTH ON MONTH

The overall balance of firms expecting an increase in their staffing levels against those that are expecting a decrease rose for a third straight month to 39 per cent, up two points from December.

Trevor Williams, Chief Economist, Lloyds Bank Commercial Banking, said: “Recent surveys and the latest GDP estimate point to some slowdown in growth momentum towards the end of 2014. However this month’s Barometer shows renewed momentum for the start of the year, reflected by the level of companies’ optimism about the economy as well as their trading prospects.”

-Ends-

Notes to editors:

  • The overall “balance” of opinion weighs up the percentage of firms that are positive in outlook against those that are negative.  Responses are re-weighted to reflect the composition of the economy.
  • The industrial sector in this report represents mainly manufacturing and construction; the consumer services sector comprises distribution and transport & communications; business & other services consists of financial & business services and the public sector.

The Business Barometer results provide early signals about UK economic trends and other business surveys such as the PMI survey.

The survey started in January 2002 and research is carried out monthly on behalf of Lloyds Bank by BDRC Continental. This survey was conducted with around 300 companies with turnover above £1 million between 12 and 22 January 2015 from all sectors and regions of Great Britain.

http://www.lloydsbankcommercial.com/economic-research/