Business confidence falls to three-month low

Business confidence fell to a three-month low this month, the latest Lloyds Banking Group business barometer has found.
The survey, which was conducted between September 2 and September 16, found that confidence fell by 3 percentage points to 47 per cent.
The dip in confidence came after an optimistic period for businesses, with the tracker reaching 50 per cent, its highest level since November 2015, in July and August.
It also coincided with a drop in economic optimism which fell to 38 per cent, its lowest level since March.
Hann-Ju Ho, a senior economist at Lloyds Bank commercial banking, said: “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.”
There have been concerns that gloomy messaging from Labour about the public finances, as well as a lack of clarity of expected reforms to workers’ rights, had been affecting confidence.
However, many companies are still confident about their own businesses. According to the survey, business owners’ estimation of their own company’s trading prospects increased by 2 percentage points to 56 per cent, matching this year’s high. At the same time, 63 per cent anticipated a stronger output, up one percentage point from last month.
Companies also still have positive hiring intentions, with 53 per cent of respondents saying they planned to increase their staffing levels within the next year, unchanged from the previous month.
“Although overall confidence fell this month, that fall was from an eight-year high and businesses remain positive about their own trading prospects,” Hann-Ju Ho added.
“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.”
Separately, a significant number of businesses also expressed their intentions to raise prices next year, with the figure rising 11 percentage points month-on-month to 65 per cent. This was largely driven by small business owners seeking to conserve their own profit margins.
Output projections differed from sector to sector, with falls in the manufacturing and construction sectors more than offset by a small rise in retail and a bigger rise in the dominant services sector.
Paul Gordon, managing director for relationship management at Lloyds Bank business and commercial, said: “These results show that businesses are navigating a complex period, but it’s important to recognise that the underlying numbers remain strong.
“We continue to see robust confidence levels in the key sectors and regions, while firms show increasing confidence in themselves as evidenced by the joint-highest trading prospects results this year.”