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Welsh business confidence rises in April as firms’ economic outlook brightens

Business confidence in Wales rose 22 points during April to 51%, 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 six points at 51%. When taken alongside their optimism in the economy, up 37 points to 50%, this gives a headline confidence reading of 51% (vs. 29% in March).

Welsh businesses identified their top target areas for growth in the next six months as entering new markets (43%), investing in their team, including hiring new people and investing in training (41%), and introducing new technology (33%).

A net balance of 45% of businesses in the region also expect to increase staff levels over the next year, up nine points on last month.

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

National picture

Overall UK business confidence held steady at 42% in April, the same level as recorded in March and February.

While firms’ confidence in their own prospects dipped marginally by four points to 45%, their confidence in the economy rose by four points to 39%. Meanwhile, the net balance of companies planning to increase staff levels over the coming 12 months climbed six points to 33%.

The East of England was the most confident UK nation or region in April (56%), followed by the Wales (51%) and the North East (46%).

Sector Insights 

Businesses in the manufacturing sector reported increased confidence this month, recording an increased score of 45% (up 4 points) which is the highest level for 3 months. Similarly, confidence among firms in the services sector (42%) and construction (41%) also improved, largely driven by greater economic optimism.

In retail, confidence pulled back slightly from last month’s strong showing to 40%, illustrating that confidence in this sector remains fragile. Retail is also more liable to be impacted by external factors sectors other sectors do not face into, such as the poor weather.

Sam Noble, regional director for Wales at Lloyds Bank Commercial Banking, said:

“The confidence of Welsh businesses isa testament to the hard work and resilience firms have shown in a complex and fast-moving environment.

“Such an encouraging rise in economic optimism in April also sets businesses up for a period of increased activity across Wales’ key sectors. Firms in the thriving agriculture sector, for example, have been showcasing their commitment to innovation and sustainability at trade shows like Great British Beef Week this month, putting them in pole position for growth as their industry continues to evolve.

“This is a country with huge adaptability and skill. Whatever their ambitions, we’ll continue to be by the side of businesses to help them achieve their plans.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said:

“We are beginning to see a consistent trend emerge from our Barometer results in recent months. Businesses are feeling increasingly confident about the economy, coinciding with falling inflation and hopes that interest rates will start to fall this year.

“There continues to be a mixed picture among the regions, with the biggest rises seen in Wales and the South West. The strongest confidence was reported in the East of England, with confidence rising for the third consecutive month. Confidence in the North East eased slightly but remained strong in April.

“The second quarter of 2024 has started brightly for businesses, and we are seeing firms expressing greater confidence in an enduring economic recovery.”