Business confidence in Yorkshire and the Humber rose 11 points during January to 44%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in Yorkshire and the Humber reported higher confidence in their own business prospects month-on-month, up 18 points at 54%. When taken alongside their optimism in the economy, up four points to 34%, this gives a headline confidence reading of 44% (vs. 33% in December).
Yorkshire and the Humber businesses identified their top target areas for growth in the next six months as entering new markets (39%), investing in their team (37%) and introducing new technology (33%).
A net balance of 29% of businesses in the region also expect to increase staff levels over the next year, down five points on last month.
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
National picture
Overall, UK business confidence rose nine points in January to 44% – its highest level since February 2022 and its strongest start to a year since 2016. Firms’ outlook on the overall UK economy rose ten points from 27% to 37%, while businesses’ optimism in their own trading prospects also climbed three points month-on-month to 51%.
Companies’ hiring intentions increased marginally, with 33% of firms intending to increase staff levels over the next 12 months, up four points on the month before.
London and the North East were the joint most confident parts of the UK in January – each posting a headline confidence of 62% – followed by the West Midlands (56%) and Yorkshire & the Humber (44%).
The East of England (38% in January vs. 45% December) and Northern Ireland (29% vs. 36%) were the only two regions to reporting declining levels of confidence. The majority of the data was collected before the December ONS inflation data was announced on January 17th.
Sector insights
Three of the four sectors tracked in the Barometer reported rises in confidence. The most significant increase was in services which accelerated 15 points to 45%, up from December’s 16 point drop. Manufacturing confidence also increased to 49%, while construction rose eight points to a 10-month high of 45%.
There was a more mixed picture in retail however, dipping three points to 41% with anecdotal evidence of weaker footfall and sales in December as shoppers hit the streets earlier than usual in November. Nevertheless, some companies still reported stronger sales over the festive period.
Steve Harris, regional director for Yorkshire and the Humber at Lloyds Bank Commercial Banking, said: “The prospect of a more stable economic environment in 2024 is likely to be a big part of why Yorkshire businesses are starting the year on such a confident footing. While challenges undoubtedly remain, it’s promising to see firms looking to enter new markets to maximise growth in the year ahead.
“We’ll continue to be by the side of local firms as we approach this new year with a positive outlook. Whether that’s managing working capital or investing in the latest technology, our team of experts are here to help firms realise their full growth potential.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “Businesses are feeling more confident following the cautious end to 2023, with this being the strongest start to a year since January 2016. The reduction in inflation, albeit with the recent uptick, and the belief that interest rates may have peaked is likely driving the rise in confidence among firms.
“With ongoing geopolitical issues and a general election on the horizon, businesses will have factored these into their risk radars and will be working to prepare for any potential impacts on their trading prospects.
“Also, half of all companies say they’re planning to increase headcount in the coming year. Despite that and the changes to minimum wage that will come into force in April, expectations for staff pay fell back following last month’s increase.”
