The Lloyds Bank Business Barometer for May shows:31 May 2022 09:03
Business confidence rose for the first time in three months, but it weakened in consumer-related sectors.
Businesses were most concerned about rising costs and economic slowdown in the next six months.
Firms’ pricing expectations remain high, with 57% planning to raise prices.
The number of firms expecting to give higher pay awards increased with 16% likely to make awards of 4% or more as hiring intentions pick up.
Confidence increased in eight of the 12 UK regions (versus seven in April) and was highest in London, the West Midlands and the North West.
Businesses reported a rise in confidence for the first time since February and the start of the war in Ukraine, according to the latest Lloyds Bank Business Barometer. Confidence increased five percentage points to 38%, the highest since February 2022 and 10 points above the long-term historical average of 28%.
Confidence in the retail sector, however, fell two points to 27%, its lowest level since March last year amid the widely held concerns on the squeeze on household incomes and despite fading worries about COVID-19.
Despite the increase in overall business confidence, 46% of businesses cited higher costs as one of their biggest concerns over the next six months, while 34% cited economic slowdown. In contrast, COVID-19 concerns have decreased to 20% since 45% at the start of the year. As a result, businesses are likely to respond by focusing on building in financial and operational resilience, including through strong working capital management and optimising inventory levels, while working closely with their suppliers and customers.
According to the Barometer, employment intentions increased for the first time in three months, with 53% (rising nine points) of firms expecting to increase their workforce. This is the second highest level seen since the start of the pandemic. Hiring intentions appeared particularly strong for construction firms, with 61% expecting to increase their work force compared to 45% of firms in consumer-related sectors.
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