Bank of Scotland’s Business Barometer for February 2018 shows:
Overall confidence for firms in Scotland rose 17 points during February to 35 per cent
Economic optimism in the region stood at 33 per cent, 20 points above last month
Job creation increased by 23 points to 27 per cent compared to January
Business confidence in Scotland rose 17 points during February to reach 35 per cent, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
Companies in Scotland report higher confidence in their business prospects at 37 per cent (up 15 points from 22 per cent) and higher economic optimism at 33 per cent (up 20 points from 13 per cent).
Together, this gives an overall confidence of 35 per cent, which is 17 points above last month’s figure of 18 per cent.
Companies’ hiring intentions showed that a net balance of 27 per cent of businesses in Scotland now expect to hire more staff during the next year, up 23 points on last month.
Across the UK, overall confidence fell two points to 33 per cent, driven mainly by a fall in firms’ confidence in their own business prospects.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Fraser Sime, regional director at the Bank of Scotland Commercial Banking, said: “It’s encouraging to see confidence rise among Scottish businesses, but one positive month doesn’t reflect the entire picture seen across the country.
“While notably higher than in January, firms’ overall confidence and their hiring intentions are now only in line with the average across the UK.
“As such, these figures reflect a return to cautious optimism for Scottish businesses, which is understandable given the economic uncertainty they still face.”
Overall confidence was highest among businesses in London, at 50 per cent, followed by the North East and East Midlands, both at 42 per cent.
“Businesses in the South East were least confident, with an overall confidence 10 points below the national average of 33 per cent.”
Manufacturing takes lead as construction slips
The manufacturing sector reported the highest level of overall confidence at 41 per cent, overtaking construction, where confidence dropped five points to 37 per cent in January.
Elsewhere, confidence in consumer services – which includes retail – rose from 27 per cent to 31 per cent, driven by stronger retail sentiment, which leapt 20 points from 17 per cent to 37 per cent.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “Across the country, firms remain resilient and have maintained last month’s increase in economic optimism.
“Nationwide, the survey is consistent with slightly stronger growth in GDP in the first quarter of 2018 than was seen in the last quarter of 2017.”
The Business Barometer’s measure of overall business confidence is the average of responses about how businesses regard the economic outlook and their own trading prospects.
The overall ‘balance’ of opinion weighs up the percentage of firms that are positive in outlook against those that are negative. Responses are 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. The survey started in January 2002 and research is carried out monthly on behalf of Bank of Scotland by BDRC Continental.
This survey was conducted with around 1,200 companies – including 100 businesses in Scotland - with turnover above £1 million between 1st and 16th February 2018.