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Welsh Business confidence remains strong as firms set sights on growth

Welsh flag (Adobe Stock)

Business confidence in Wales rose six points during April to 32%, 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 nine points at 42%.  When taken alongside their optimism in the economy, up three points to 22%, this gives a headline confidence reading of 32%.

Welsh businesses identified their top target areas for growth in the next six months as diversifying into new markets (35%), evolving their offer (23%) and investing in sustainability (22%)

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

A net balance of 21% of businesses in the region expect to increase staff levels over the next year, up one point on last month.

Overall, UK business confidence climbed one point to 33% in April. Every UK nation and region reported a positive confidence reading and six out of 11 regions recorded a higher reading than last month. London reported the highest levels of business confidence at 47% (up nine points month-on-month), followed by East Midlands (up 18 points) and North East (up three points), both at 41%.

Firms’ outlook on their own trading prospects remained strong at 39% for the second consecutive month, and a net balance of 27% of businesses are intending to increase their staff levels, up two points on March.

Ahead of the three Bank Holidays in May, firms’ optimism in the overall economy increased five points to 28% – the highest reading since June last year.

Dave Atkinson, regional director for Wales at Lloyds Bank Commercial Banking, said: 

“It’s fantastic to see business confidence among Welsh firms continue to rise as we head into a month jam-packed with bank holidays and celebrations. The country’s retail, leisure and hospitality sectors in particular will be hoping this drives an increase in footfall and boosts consumer spending.

“It’s important that firms are prepared for any increase in business activity over the coming weeks. Welsh companies will benefit from strong working capital management and ensuring that additional funds are available to purchase any extra resources necessary to support with the anticipated spike in demand.”

Business confidence in the service sector rose to 36% this month, the highest since May 2022, with sentiment particularly upbeat in hospitality and financial services. While the other sectors saw slight decreases, construction remained strong at 43% while manufacturing and retail remain above last year’s lowest levels.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said:

“The recent increases in business confidence indicate that the economy entered the second quarter of 2023 with positive momentum.

“The revival in the demand for labour, which improved for the fifth consecutive month, may account for the modest uptick in wage expectations for the next twelve months.

“While firms’ concerns on overall cost pressures have eased, there is little evidence that pricing expectations have declined which may impact wider pricing decisions for the remainder of 2023.”