Business confidence in Yorkshire rose six points during March to 57%, its highest level since before the pandemic and the second highest reading of all UK regions and nations, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported higher confidence in their own business prospects month-on-month, up seven points to 61%. When taken alongside their optimism in the economy, up six points to 54%, this gives a headline confidence reading of 57%.
Yorkshire businesses have identified a range of growth opportunities for the next six months, including investing in their teams (41%), diversifying into new markets (37%), and evolving their offering, such as introducing new products or services (31%).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 60% of Yorkshire businesses expect to increase staff levels over the next year, up seven points on last month.
Overall UK business confidence dropped 11 points during March, from 44% to 33%. Firms’ outlook on their future trading prospects (down from 45% to 34%) and optimism in the economy (down from 43% to 32%) both also fell by 11 points on February’s reading. The net balance of businesses planning to create new jobs decreased slightly, by six points to 32%.
Every UK region and nation reported positive confidence readings in March, with the exception of Wales which saw confidence drop from 29% to -5%. Along with Yorkshire, only London (up 13 points to 60%) and the North West (up one point to 45%) reported a higher reading than last month.
Steve Harris, regional director for Yorkshire at Lloyds Bank Commercial Banking, said: “Despite the very real challenges businesses are facing around rising costs, coupled with the ongoing geo-political situation in Europe, Yorkshire firms are continuing to seize every available opportunity to drive growth.
“Taking advantage of the competitive hiring market is bearing fruit, with businesses able to invest in strengthening their teams with new expertise and specialisms.
“The road ahead will inevitably bring further obstacles. But with the right support, and through clear planning, businesses can maintain the resilience they have built throughout the pandemic to keep growth prospects high.”
From a sector perspective the impact of the war in Ukraine appears to have had the greatest impact on manufacturing and retail firms. Both sectors saw drops in confidence of 19% from February’s highs (to 35% and 28% respectively). From a manufacturing perspective, confidence levels are now at their lowest since last summer, while retail has fallen to a one-year low.
In the other sectors, services dropped by six points (32%) while construction dropped eight points to 43%, but remained higher than at the start of the year.
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “March’s data shows UK businesses are facing significant challenges from the impact of Russia’s invasion of Ukraine in increasing economic uncertainty and ongoing inflationary pressures. Following encouraging improvements at the start of the year, March’s fall in confidence is therefore disappointing, but not surprising.
“There are positives with the fact that confidence remains above the long-term average and it appears for now that growth will moderate. But it is difficult to gauge what the full impact will be and therefore businesses have become more cautious.”
