The headline business confidence reading for the region was 45%, compared with 75% in July
Martyn Kendrick of Lloyds in the North East.(Image: Lee McLean/SWNS)
Confidence among businesses in the North East fell significantly in August, new research suggests.
Firms in the region reported lower confidence in their own trading outlook, month-on-month, down 24 points at 56%, according to the Business Barometer from Lloyds – a regular survey that gives early signals on economic trends.
North East companies’ optimism in the economy was down 37 points to 33% in the survey which gathered data between August 3 and 17 – a period in which new data showed surprise growth of the economy in the three months to the end of June. Together with the view of their own trading, the scores gave a headline confidence reading of 45%, compared with 75% in July.
Business confidence in the North East now sits below the 12-month average of 56%, with its highest figure of 75% in July. North East firms’ confidence in their own trading outlook was influenced by stronger customer demand (57%) and increased investment in technology (55%), while confidence in the economy was helped by reports of rising market demand (71%).
Regional firms said their top target areas for growth in the next six months are investing in their team , evolving their offering by introducing new products or services and entering new markets. Nearly a third of businesses in the region expect to increase staff levels over the next year, but that is down on hiring intentions last month.
Martyn Kendrick, regional director for North East at Lloyds, said: “While we have seen confidence dip this month, it’s encouraging to see that North East businesses haven’t hit pause, and are remaining notably more positive about their own trading outlook than the wider economy.
“Economic optimism may have softened, but businesses across the region are backing themselves to grow with many already taking practical steps to strengthen their position, from investing in technology to exploring new markets. We’ll continue to support North East businesses as they invest, adapt and plan for the future.”
The North East reading came as overall UK business confidence was up four points in August to 53% – its highest since the start of the Iran conflict earlier this year, and above the 12-month average of 47%. Increased economic optimism was the main driver, up 18 points since June
Meanwhile firms’ outlook on their own trading improved two points to a three-month high of 58% in August, compared to a 12-month average of 56%. Researchers found 66% of businesses expect an increase in output the next year with 8% expecting a decrease.
Amanda Murphy, CEO Lloyds Business and Commercial Banking, said: “It’s encouraging to see business confidence rise for the second month in a row, reaching its highest level since March. While international firms remain more confident, it’s good to see domestic companies register a strong month-on-month increase.
“Overall, businesses are reporting stronger customer demand, greater optimism about the wider economy and growing confidence in their own trading outlook, all of which will be helping to support investment and growth plans.
“While businesses continue to operate in a challenging environment, easing cost pressures and fewer firms expecting to raise prices in the coming year, should allow them to focus less on managing headwinds and more on pursuing growth.”
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