Business confidence in Yorkshire fell seven points during May to 34%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported lower confidence in their own business prospects month-on-month, down eight points at 44%. When taken alongside their optimism in the economy, down five points to 24%, this gives a headline confidence reading of 34%.
Yorkshire businesses identified a range of growth opportunities for the next six months, including evolving their offering (53%), entering new markets (31%) and investing in their teams (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 30% of Yorkshire businesses expect to increase staff levels over the next year, down 11 points on last month.
Overall UK business confidence increased by five points during May to 38% – its highest level since February. Firms’ outlook on their future trading prospects rose three points to 42%, and their optimism in the economy increased seven points to 33%. The net balance of businesses planning to create new jobs also increased by 11 points to 37%.
Every UK region and nation reported positive confidence readings in May. London (up 23 points to 63%), Scotland (up 14 points to 42%) and the North West (up 12 points to 44%) reported the largest increases month-on-month, with London now the most optimistic region overall. The East of England, which experienced a 20-point dip in confidence in the last month, is now the least optimistic overall, at 14%.
Steve Harris, regional director for Yorkshire at Lloyds Bank Commercial Banking, said: “The region’s firms aren’t immune to the ongoing challenges many businesses are facing, including rising costs and skills shortages.
“Despite this, it’s encouraging to see business confidence remain in positive territory, with many setting their sights on growth. To ensure they can jump on opportunities as they arise, firms now need to be prioritising their cash flow management, reviewing supplier and customer payment times and optimising inventory levels to ensure that vital funds are ready to invest, as and when they’re needed.
“I have every confidence that our region’s resilient business community will overcome current headwinds and continue to help Yorkshire prosper.”
From a sector perspective, retail confidence fell two points to 27%, remaining lower than the all-sector average of 38% in the last three months. The confidence level is also the lowest since March 2021 as pressure on household real incomes weigh on spending prospects. In contrast, there was a 21-point rise in construction to 54%, while manufacturing sentiment remained resilient, up two points to 45%. Confidence in the services sector reached a three-month high, increasing 4 points to 36%.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence improved this month and firms in general seem able to rebuild some of their margins through price increases. However, they also report several challenges ahead, including concerns around higher costs and an economic slowdown. More immediately, consumer-facing industries, such as retail, are not feeling the same confidence uplift amid the widespread reports of a squeeze on household incomes.”
