Business confidence in Yorkshire fell seven points during July to 38%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in Yorkshire reported lower confidence in their own business prospects month-on-month, down 12 points at 36%. When taken alongside their optimism in the economy, down three points to 39%, this gives a headline confidence reading of 38%.
Yorkshire businesses identified their top target areas for growth in the next six months as investing in their teams (40%), evolving their offer (39%) and introducing new technology (30%). 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 decrease staff levels over the next year, down six points on last month.
Overall, UK business confidence dipped by six points to 31% in July, with nine out of 11 regions and nations reporting a lower confidence reading month-on-month.
Optimism in the economy has also fallen, dropping 11 points to 21%, the lowest levels since February this year.
However, firms remained resilient in their own trading prospects, with 43% of companies expecting business activity to increase over the next 12 months, up one point on last month and reaching a 14-month high.
Despite the fall in overall confidence, levels remain higher than the survey’s long-term average reading of 28% and every UK region and nation reported a positive confidence reading in July. The North East reported the highest levels of business confidence at 43% (down four points on last month), followed by Yorkshire and the West Midlands (up two points month-on-month) both at 38%.
Retail was the only broad sector registering higher confidence (up six points to 35%), mostly reflecting stronger transport services.
The fall in overall business confidence this month was led by the service sector sentiment falling by seven points to 30%. While the fall in confidence was seen broadly across this sector, hospitality firms appeared to be more resilient.
Confidence also was lower in manufacturing (down 16 points to 34%) and construction (down eight points to 31%).
Steve Harris, regional director for Yorkshire at Lloyds Bank Commercial Banking, said: “Although high inflation persists, signs of it starting to ease is welcome news to businesses who’ve been navigating its challenges for many months.
“From speaking to many businesses on the ground, I know that they’re now starting to plan around future growth opportunities. Many see expanding their workforce and investing in their teams as a way of achieving their ambitions, which will bring an appreciated boost to the local economy.
“As firms invest in their workforce, it’s important they keep a close eye on their working capital and free up funding to support them as they train and develop the skills they need to grow.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “The Barometer presents a complex picture for firms this month, with the data showing that trading prospects remain strong with businesses feeling under less pressure by inflation to raise prices.
“However, there is clearly uncertainty about the wider economy and rising interest rates. This may be causing net hiring intentions to moderate slightly. Nevertheless, wages and jobs growth continue to support staff with the current cost of living.
“However, the sectoral analysis this month shows some positive signs for the retail sector, while there are indications that pent-up demand may be boosting confidence in tourism and travel. As businesses continue to adapt to the economic environment, we expect to see ongoing resilience broadly across all sectors.”
