Business Barometer June: Confidence stays at eight-month high

30 June 2015

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

  • UK business confidence remained steady in June.
  • Sentiment improved in the business services sector, but was offset by declining confidence in the distribution and industrial sectors.
  • Survey suggests that GDP growth in the first quarter will be revised upwards and points to an acceleration in growth for the second quarter.

Business Barometer Question

Positive

(%)

Same

(%)

Negative

(%)

Net Balance (%)

Monthly Change

Optimism about the economy

68

23

9

59

-2

Optimism about own business

54

42

4

50

1

Overall Business Confidence

(Average of above indicators)

61

33

6

55

No change

Business confidence remained at a strong level in June, staying steady at its eight month high since September, according to the latest Lloyds Bank Business Confidence Barometer, which tracks over 300 firms’ views of their own prospects and the wider economy. 

The Barometer’s measure of overall business confidence stayed at 55 per cent, reflecting a marginal improvement in the net balance for companies’ own trading prospects, which increased by one point to 50 per cent, offset by a two point decline in economic prospects to 59 per cent.

The unchanged overall indicator of 55 per cent is well above the long-term historical average of 30 per cent and suggests that UK GDP growth, which could be revised higher in the first quarter, is set to accelerate in the second quarter.

Manufacturing sentiment improves

Sentiment in the business services sector rose seven points to 54 per cent this month, after a decline in May. However confidence levels in the distribution and industrial sectors fell eight points to 51 per cent and 61 per cent, respectively.

Despite this decline, the survey suggests that general levels of activity remain strong across the broad sectors in the second quarter.

Employment outlook eases

The Barometer shows that during June, the net balance of firms expecting to increase staff numbers fell four points to 41 per cent, suggesting that the pace of employment growth may ease from previous highs.

South and Midlands show increase in confidence

Firms in the South and the Midlands saw a modest rise in confidence to reach eight month highs of 57 and 54 per cent respectively, while there was a four point decline in confidence from firms in the North, falling to 51 per cent.

Trevor Williams, Chief Economist, Lloyds Bank Commercial Banking, said: “Business confidence remains strong and indicates that we will see an acceleration in GDP growth for the second quarter. Although the situation in Greece remains highly uncertain and risks have intensified, we will watch closely to see how confidence is affected in next month’s survey.”

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 1 and 11 June 2015 from all sectors and regions of Great Britain.

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