Business confidence in Wales fell five points during July to 27%, 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 one point at 42%. When taken alongside their optimism in the economy, down 11 points to 13%, this gives a headline confidence reading of 27%.
Walsh businesses identified their top target areas for growth in the next six months as investing in their teams (44%), introducing new technologies (36%) and diversifying into new markets (27%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 38% of businesses in the region expect to increase staff levels over the next year, up ten points on last month.
Overall, UK business confidence dipped by six points to 31% in July, with nine out of 11 regions and nations reporting a lower confidence reading month-on-month.
Optimism in the economy has also fallen, dropping 11 points to 21%, the lowest levels since February this year.
However, firms remained resilient in their own trading prospects, with 43% of companies expecting business activity to increase over the next 12 months, up one point on last month and reaching a 14-month high.
Despite the fall in overall confidence, levels remain higher than the survey’s long-term average reading of 28% and every UK region and nation reported a positive confidence reading in July. The North East reported the highest levels of business confidence at 43% (down four points on last month), followed by Yorkshire (down seven points month-on-month) and the West Midlands (up two points month-on-month) both at 38%.
Retail was the only broad sector registering higher confidence (up six points to 35%), mostly reflecting stronger transport services.
The fall in overall business confidence this month was led by the service sector sentiment falling by seven points to 30%. While the fall in confidence was seen broadly across this sector, hospitality firms appeared to be more resilient.
Confidence also was lower in manufacturing (down 16 points to 34%) and construction (down eight points to 31%).
Dave Atkinson, regional director for Wales at Lloyds Bank Commercial Banking, said:
“Following a similar trend to other parts of the UK, business confidence in Wales has dipped slightly this month. Despite the drop in overall confidence, businesses remain focused on investing in their teams and it’s reassuring to see so many Welsh companies planning to grow their workforce as they plan for the future.
“There’s a whole host of facilities available to businesses looking to train and develop their teams. The manufacturing sector can access training support through the Advanced Manufacturing Training Centre, and those in the agriculture industry can seek support through bodies like the Soil Association. As always, we’ll remain by the side of businesses and offer them the practice advice and support tools they need to grow.”
