Business confidence slips for a second month

Nia Williams

November 16, 2009

The survey shows that overall business confidence fell two points last month, to its lowest level since June. However, the overall trend is still rising, and confidence levels are still markedly higher than in early 2009.

The balance of firms expecting business activity to improve slipped two% to 27% – 38% reported higher confidence levels, while 11% reported lower confidence.

Firm’s views of the general outlook for the economy remain broadly unchanged. There was a 1% increase, to 43%, in the balance of firms who are now more optimistic about the wider economy than they were three months ago. Two thirds (65%) are more optimistic, while a fifth (22%) are more pessimistic.

Across the regions, the survey presents a mixed picture. In the South, there was an 11% increase in confidence (to 38%) amongst businesses. However in the Midlands, confidence fell markedly – by 16%, to just 15%. Confidence levels slipped in the North too, by 4% (to 25%).

There was a varied impact across the sectors too. Confidence levels amongst industrial firms jumped 21% to 40%, but distribution firms (which includes retailers) suffered a drop in confidence (down 5% to 17%) and services businesses showed a 13% decline to 27%.

Trevor Williams, chief economist, Lloyds TSB Corporate Markets, said: “Business confidence has recovered sharply from the lows at the turn of the year, however it is still below its long term average. But current levels of business confidence are consistent with a recovery in economic growth, albeit a gradual one.”

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