Business confidence in Wales rose 11 points during October to 45%, the highest level since September 2021, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in Wales reported higher confidence in their own business prospects month-on-month, up 14 points at 48%. When taken alongside their optimism in the economy, up nine points to 43%, this gives a headline confidence reading of 45%.
Welsh businesses identified their top target areas for growth in the next six months as investing in their teams (38%), entering into new markets (35%) and evolving their offer (31%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 45% of businesses in the region expect to increase staff levels over the next year, up 23 points on last month.
Overall UK business confidence rose three points in October from 36% to 39%, and firms’ outlook on the overall UK economy increased four points to 34%. Businesses’ confidence in their own trading prospects also continued the upward trend, rising four points to 45%.
Companies’ hiring intentions reached their highest level since May last year, with 32% of firms intending to increase staff levels over the next 12 months, up six points month-on-month.
Firms in Yorkshire reported the highest levels of business confidence, jumping 12 points to 52% – the highest reading for the region since March 2022. Companies in the South West reported the biggest uptick in business confidence, increasing 26 points month-on-month to 47%.
Following a fall in confidence in September, the retail and service industries both saw an increase in business confidence, with retail business confidence increasing by five points to 37% and services rising seven points to 43%. Levels are still lower than seen in August, however, when retail business confidence was at 44% and services at 42%. Manufacturing confidence was 36%, unchanged from last month when confidence rose to a three-month high. Construction fell for a second month in a row to 31% (down five points).
Sam Noble, regional director for Wales at Lloyds Bank Commercial Banking, said:
“This is a huge moment for Welsh businesses, as confidence reached its highest level in two years. It’s an incredible achievement and a testament to firms’ attitudes to growing and seizing on the opportunities coming their way.
“The next challenge will be keeping this momentum going. I know that businesses are eyeing up investments in all areas, and particularly in investing in their teams. Those looking to upskill their staff members should take advantage of support available, for example, Lloyds Bank are working alongside the MTC to foster and develop growing talent in the manufacturing sector.
“As always, we’ll remain by the side of businesses in Wales, providing them with the practical tools and advice they need to continue to grow.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said:
“Business confidence this month reflects a more positive outlook as we head into the important festive period, with trading prospects and economic optimism both at their second highest levels this year. The level also underlines the wider upward trend of steadily rising confidence in 2023. If you look at the year in quarterly time periods, confidence has steadily risen from 20% in the first quarter, 26% in the second and in September an average of 27% in the third.
“However, our data shows that firms are still safeguarding their profit margins in response to the possibility of interest rates remaining high, wage increase pressures, and the prospect of higher energy prices again this winter.
“Therefore, businesses will be keeping a keen eye on the forthcoming Autumn Statement and Bank of England policy announcements as they navigate through a challenging economic period ahead.”