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Welsh business confidence sees biggest month-on-month increase in UK

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

Business confidence in Wales rose 25 points during April to 20%, the biggest month-on-month increase of any UK nation or region, 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 27 points at 27%.  When taken alongside their optimism in the economy, up 21 points to 11%, this gives a headline confidence reading of 20%.

Welsh businesses flagged a range of growth opportunities for the next six months, including evolving their offering with a new product or service (38%), investing in their team (37%) and entering new markets (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 16% of businesses in the region expect to increase staff levels over the next year, up 22 points on last month.

Overall, UK business confidence remained unchanged during April, at 33%. Firms’ outlook on their future trading prospects rose five points to 39%, but their optimism in the economy dipped slightly on March’s reading (down from 32% to 26%). The net balance of businesses planning to create new jobs also decreased by six points to 26%.

Every UK region and nation reported positive confidence readings in April. After Wales, the South East (up 19 points to 30%) and the West Midlands (up 10 points to 42%) reported the largest increases month-on-month, with the West Midlands now the most optimistic region overall.

Dave Atkinson, regional director for Wales at Lloyds Bank Commercial Banking, said: “It’s encouraging to see confidence among Welsh businesses return to a positive reading so emphatically this month. The move to level zero restrictions will have undoubtedly been a boost, bringing a greater sense of certainty for firms and confidence among consumers.

“We hope that this optimism will remain as we head into the summer months, which will be an important time for sectors reliant on increased seasonal trade. We’ll be working with our customers to make sure they can turn this returning confidence into growth and enjoy a successful summer.”

From a sector perspective, manufacturing confidence increased by eight points to 43%, erasing part of the 19-point decline in March, helped by somewhat stronger trading prospects.

Retail and services confidence, however, were little changed on the month and is weaker than at the start of the year, with businesses increasingly concerned about the outlook for the wider economy. Retail confidence edged up one point to 29%, while services confidence was unchanged at 32%. Construction confidence fell for a second month to 33%, but is still on a par with the all-sector average.

Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “April’s data is mixed and follows the significant decline in business confidence in March after Russia’s invasion of Ukraine. Although firms reported a partial recovery in their trading prospects, optimism for the wider economy declined for a second successive month.

“Positives remain as overall confidence is above the long-term average, but it is still expected that growth will moderate over the coming months and many businesses will remain cautious as they face into these headwinds.”