BUSINESS confidence in Wales took a significant hit in August, dropping by 27 points to a mere 35%, according to the latest Business Barometer from Lloyds Bank Commercial Banking. This marks a sharp decline in sentiment among Welsh businesses compared to previous months.
The survey revealed that companies in Wales are feeling less optimistic about their own business prospects, with confidence falling by 19 points to 43%. This downturn in self-assurance is compounded by a stark drop in optimism about the broader economy, which plunged by 34 points to 28%. The combined effect of these factors has resulted in an overall confidence reading of 35%, a steep decline from July’s figure of 62%.
Looking towards the future, Welsh businesses have pinpointed key areas for potential growth over the next six months. Top priorities include evolving their offerings, such as launching new products or services (39%), adopting new technologies (39%), and investing in their workforce through training and development (36%).
The Business Barometer, which canvasses 1,200 businesses across the UK on a monthly basis, serves as an early indicator of economic trends both regionally and nationally.
Across the UK, overall business confidence remained steady in August, holding at 50%, the same level as in July. Confidence in the UK economy saw a slight improvement, inching up by two points to 47%. However, this was offset by a marginal decline in firms’ confidence in their own trading prospects, which dipped by two points to 54%. Despite this slight decrease, confidence levels remain above the long-term average.
The North East emerged as the most confident region in the UK, boasting a 65% confidence level, closely followed by Scotland at 64%.
Sector-specific data painted a mixed picture, with some industries experiencing gains while others saw declines. The construction sector experienced a robust increase in output expectations, rising by 14 points to 58%, reflecting strong growth prospects. Conversely, the manufacturing sector saw a slight decrease, with trading prospects dropping by two points to 58%, bringing it in line with the construction sector. Meanwhile, the Retail and Services sectors experienced declines, with confidence levels falling to 53%, down by 7 and 3 points respectively.
Sam Noble, Regional Director for Wales at Lloyds Bank Commercial Banking, commented: “Despite the recent dip in confidence, Welsh businesses remain determined to pursue growth. Whether it’s through launching new services or investing in their teams, these companies are actively seeking new opportunities. As they navigate these challenges, we are committed to supporting them with our insights, tools, and on-the-ground expertise.”
Hann-Ju Ho, Senior Economist at Lloyds Bank Commercial Banking, added: “August’s business confidence figures remain strong, with the overall UK confidence level staying at 50%, well above the long-term average of 29%. This sustained confidence, which has been above the average for the past 15 months, is supported by encouraging GDP data from the first half of the year. The survey results suggest that this solid economic performance is likely to continue into the second half of the year.
“However, there are some cautionary signs, such as the increase in wage growth expectations this month. Although this uptick has not reversed the downward trend seen so far in 2024, it is something to watch closely. Overall, the economy appears stable, and businesses are reflecting this sentiment in their outlook.”