According to the latest Business Barometer from Lloyds Bank Commercial Banking, companies here reported lower confidence in their own business prospects month-on-month, down 20 points at 45%. When taken alongside their optimism in the economy, down 26 points to 39%, this gives a headline confidence reading of 42% (vs. 65% in August).
Fewer businesses in the region expect to increase staff levels over the next year, with a net balance of 34% of businesses down 15 points on last month.
Looking ahead to the next six months, North East businesses identified their top target areas for growth as investing in their team, for example, by investing in training and development (56%), introducing new technology (36%) and entering new markets (31%).
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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 in September dipped slightly, to 47% down from August’s 50%.
Though there was a marginal increase in their own trading prospects (up two points month-on-month to 54%, firms’ confidence in the overall economy dropped nine points to 38%. The joint-most confident regions in the UK were the West Midlands and London, both reporting overall confidence of 59%. Only Northern Ireland, Wales, London, the South West and North West reported an increase in overall confidence.
Sector Insights Projections for output were mixed across the sectors, with some showing significant changes from previous results. In construction, the sharp increase last month was largely counteracted by a drop in expectations in September, falling by 12 points to 46%.
Similarly, in manufacturing, trading prospects fell for a second month to 53%, although this figure is still stronger than the year-on-year figure. However, the falls in manufacturing & construction sectors were more than offset by a small rise in retail and a bigger rise in the dominant service sector.
Martyn Kendrick, regional director for the North East at Lloyds Bank Commercial Banking, said: “The stark drop in confidence for North East businesses doesn’t reflect the fantastic talent, innovation and skills that we see every day in local firms.
“That’s why our confidence at Lloyds Bank in the North East hasn’t wavered. With Mayor Kim McGuinness’ plans to inject £70m into firms, and the support we offer to help businesses thrive, we hope the region will be bolstered to scale its businesses further – and feel a bit more confident in their prospects.”
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “Although overall confidence fell this month, that fall was from a nine-year high and businesses remain positive about their own trading prospects. The joint-highest result this year could suggest that respondents still see a positive future for their own companies, which is also reflected in the largely unchanged employment figures.
“The more mixed picture for economic optimism points to some businesses maintaining a degree of caution. While we still expect economic expansion, it may occur at a slower rate than the first half of 2024.”