Business
Business Confidence Falls as Iran Conflict Drags On
Business confidence slipped over the past month as firms wrestled with stubborn inflationary and cost pressures, with the Middle East war now into its fifth month, according to a survey published today.
The index of sentiment among private-sector companies compiled by Lloyds Bank’s Business Barometer fell by 3 points to 44 per cent in June, leaving it below the 12-month average of 47 per cent. Economic optimism also dropped, down 4 points to 31 per cent.
The lender said businesses were most worried about the rising cost of production, a concern likely tied to the higher energy prices triggered by the Gulf conflict. Over the weekend the United States and Iran traded strikes, each accusing the other of breaching the terms of the ceasefire agreement.
The decline in confidence was most pronounced among manufacturers, where optimism tumbled by 10 points to 33 per cent, a reflection of the sector’s heavy energy use. The reading among retailers fell by 8 points to 45 per cent. Energy costs have remained the single biggest brake on SME growth for much of the past year, with smaller firms warning they have no price-cap protection of the kind afforded to households.
Although inflationary worries persist, oil prices have eased sharply in recent weeks. The price of a barrel of Brent crude, the international benchmark, has fallen back below the levels seen before the conflict broke out at the end of February.
Amanda Murphy, chief executive for Lloyds Business and Commercial Banking, said: “While cost pressures and global uncertainty continue to weigh on business confidence, international firms are much more confident, with many seeing signs of supply chain disruption easing and strengthening customer demand.”
There was better news on jobs. Lloyds said companies’ hiring intentions rose for the first time in three months. Some 55 per cent of the 1,200 firms surveyed said they wanted to expand their workforce, against 14 per cent planning to cut headcount, a fall of 3 points over the month.
Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “Overall, while some sectors are holding up, the data suggests that uncertainty is still feeding through unevenly and weighing more heavily on parts of the economy than others.”
The figures may signal that the UK labour market is in the early stages of stabilising after two years of weakening. Data from the Office for National Statistics showed vacancies have fallen to their lowest level in five years.
Growth has also taken a knock from the war. GDP contracted by 0.1 per cent in April, the latest ONS figures show, and the closely watched purchasing managers’ index revealed that activity in the private sector dropped to a 14-month low.
The fall in confidence over the past month may equally be tied to the latest bout of political and policy uncertainty in Westminster, after Sir Keir Starmer resigned as prime minister earlier this month, clearing the way for Andy Burnham to enter No 10 as soon as mid-July.
Mr Burnham has yet to flesh out his tax and spending plans or name his chancellor. Ed Miliband and Wes Streeting are regarded as the most likely picks to replace Rachel Reeves in No 11. Starmer’s probable successor has signalled a preference for lowering VAT on the hospitality industry and overhauling the business rates regime.
Jamie Young
Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.
When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.
The research report noted that opportunities may increasingly emerge from the broader space ecosystem and its supply chain, rather than only from companies directly involved in launching rockets. Semiconductor, electronics, software, advanced materials, manufacturing and communications infrastructure companies could benefit as the commercialisation of space accelerates.
Goldman Sachs said its custom basket of US space and satellite stocks had gained around 13 per cent in 2026 through July 14, outperforming the 9.8 per cent rise in the S&P 500 over the same period. The basket has risen more than 360 per cent over the past two years, although its rally has cooled from its late-May peak.
The report noted that the space theme has evolved significantly, with investors increasingly focusing on rocket launches, satellites, global communications and potential future markets enabled by space technologies. Some companies in the basket are also seeing rising sales linked to US government defence contracts, particularly in satellite imagery and connectivity.
A key factor supporting the sector’s outlook is the improving economics of space activity. Goldman Sachs said the cost of rocket launches and satellites has declined, while opportunities in global communications services are developing. Some companies in the space and satellite basket could become profitable as early as next year, according to analyst Louis Miller.
The report also highlighted growing investor interest in orbital broadband services, including companies such as SpaceX’s Starlink. Potential future applications such as orbiting data centres are also attracting attention, although these remain longer-term opportunities.
Goldman Sachs said demand for space-related investments is coming from retail, private wealth and institutional investors, with many seeking differentiated secular growth themes rather than traditional sector allocations.
However, the sector remains highly volatile. The Goldman Sachs space basket is roughly twice as volatile as a comparable AI basket and about five times as volatile as the S&P 500. The report cautioned that investor enthusiasm could periodically run ahead of fundamentals even if the sector’s long-term structural direction remains positive.
Business
Red-Hot Inflation And (Inflation-Adjusted) Strong Domestic Private-Sector Demand Marks Q2 GDP – Debt-To-GDP Ratio Dips To 121.5%
Red-Hot Inflation And (Inflation-Adjusted) Strong Domestic Private-Sector Demand Marks Q2 GDP – Debt-To-GDP Ratio Dips To 121.5%
The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
0921 ET — Magna International is improving its margins even while the world produces fewer vehicles. TD Cowen’s Brian Morrison says in a report 2Q results “reinforce Magna’s margin improvement story with adjusted EBIT margin expanding y/y to 6.2% despite lower y/y global light vehicle production.” At the same time, sales increased 3% to $10.98 billion, on “anticipated benefit of FX y/y and new program launches, partially offset by lower global production y/y.” This bodes well for the company. Morrison says that along with strong free cash flow, he sees upside potential to consensus and the applied multiple.” (adriano.marchese@wsj.com)
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Organon Co earnings missed by $0.50, revenue fell short of estimates
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