Business confidence in Wales fell three points to June 23% in June , according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in Wales reported lower confidence in their own business prospects month-on-month, down three points at 28%. When taken alongside their optimism in the economy, also down three points to 17%, this gives a headline confidence reading of 23%.
Welsh businesses flagged a range of growth opportunities for the next six months, including evolving their offering with a new product or service (33%), investing in the growth and development of their team (32%), and introducing new technologies to advance their operations (28%).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 12% of businesses in the region expect to increase staffing levels over the next year, down 14 points on last month.
Across the UK, business confidence fell 10 points during June to 28%. Firms’ optimism in the economy dropped 12 points to 21%, while their outlook on their future trading prospects was down eight points, at 34%. The net balance of businesses planning to create new jobs also decreased, by nine points, to 28%.
Every UK region and nation reported positive confidence readings in June. However, all except the East of England (up 17 points to 31%) recorded a lower reading than last month. London (down 28 points to 35%), the West Midlands (down 23 points to 30%) and Scotland (down 15 points to 27%) reported the largest decreases month-on-month, with the North West (down two points to 42%) now the most optimistic region overall.
Dave Atkinson, regional director for Wales at Lloyds Bank Commercial Banking, said: “It’s encouraging that businesses across Wales remain confident in the face of ongoing economic uncertainty. To increase resilience in the face of these challenges, it is important that companies carefully manage cashflow and explore opportunities for sustainable investment.
“Firms must be mindful of the amount of working capital they have available to invest in new stock or equipment to meet fluctuating prices and demand, especially during peak seasons like summer. We’ll continue to provide Welsh business with the guidance and support it needs to thrive and grow in future.”
Confidence among businesses in the manufacturing and construction sectors fell, bringing them close to the UK all-sector average, at 32% and 30% respectively, reflecting lower optimism in the economy. Service sector confidence declined to its lowest in a year, at 25%, showing weaknesses in hospitality, though offset by stronger confidence in business services. Confidence in retail businesses edged up this month four points from 27% to 31%.
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “Business confidence declined this month, suggesting that the momentum for growth is moderating. Firms remain broadly positive but face several challenges ahead, including concerns around higher costs and slowing demand. If these trends continue, businesses may have less scope to pass on higher costs to support their margins.”
