Strong start to 2024 for South East business confidence

Business confidence in the South East rose three points during January to 32%, according to the latest Business Barometer from Lloyds Bank Commercial Banking. 

While firms’ optimism in the economy fell four points month-on-month to 18%, business’ confidence in their own trading prospects climbed nine points to 47%. Taken together, this gives a headline confidence reading of 32% (vs. 29% in December).

South East businesses identified their top target areas for growth in the next six months as investing in their team (38%), evolving their offering (37%) and entering new markets (30%).

However, hiring intentions were scaled back. A net balance of 5% of businesses in the South East expect to increase staff levels over the next year, down 22 points month-on-month.  

Overall, UK business confidence rose nine points in January to 44% – its highest level since February 2022 and its strongest start to a year since 2016. Firms’ outlook on the overall UK economy rose ten points from 27% to 37%, while businesses’ optimism in their own trading prospects also climbed three points month-on-month to 51%.

Companies’ hiring intentions increased marginally, with 33% of firms intending to increase staff levels over the next 12 months, up four points on the month before.  

London and the North East were the joint most confident parts of the UK in January – each posting a headline confidence of 62% – followed by the West Midlands (56%) and Yorkshire & the Humber (44%).  

The East of England (38% in January vs 45% December) and Northern Ireland (29% vs 36%) were the only two regions to reporting declining levels of confidence. The majority of the data was collected before the December ONS inflation data was announced on 17 January.

Three of the four sectors tracked in the Barometer reported rises in confidence. The most significant increase was in services which accelerated 15 points to 45%, up from December’s 16 point drop.

Manufacturing confidence also increased to 49%, while construction rose eight points to a 10-month high of 45%.

There was a more mixed picture in retail however, dipping three points to 41% with anecdotal evidence of weaker footfall and sales in December as shoppers hit the streets earlier than usual in November. Nevertheless, some companies still reported stronger sales over the festive period. 

Becci Wicks, regional director for the South East at Lloyds Bank Commercial Banking, said: “This strong start to 2024 is hopefully a sign of good things to come. Despite challenging economic conditions, South East businesses across a wide variety of sectors, from technology and manufacturing to food and drink, are continuing to seize the opportunities ahead of them, and put ambitious growth plans into action.  

“With wider trading conditions still so uncertain, the success of their strategies – as ever – will be supported by a strong control over cashflow.

“Management teams that haven’t yet taken the opportunity to review their working capital needs should do so now.

“We’ll continue to be by their side with the specialist tools, insight and teams to make sure they have the support they need to capitalise on this confidence in the months ahead.”

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