Business confidence in the South East fell eight points during October to 41%, according to the latest Business Barometer from Lloyds.
Companies in the South East reported higher confidence in their own business prospects month-on-month, up three points at 59%. When taken alongside their optimism in the economy, down 20 points to 23%, this gives a headline confidence reading of 41% (vs 49% in September).
However, a net balance of 39% of businesses in the region expect to increase staff levels over the next year, up three points on last month.
Looking ahead to the next six months, South East businesses identified their top target areas for growth as evolving their offering, for example by introducing new products or services (44%), investing in their team, for example through training (43%) and entering new markets (28%).
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.
Overall UK business confidence climbed eight points in October to 50%. Firms’ optimism in their own trading prospects rose 11 points to 62%, while their confidence in the wider economy climbed six points to 39%.
The North East and West Midlands were the joint-most confident of any UK nation or region in October (both 62%), followed by London (60%).
October saw the manufacturing sector’s confidence increase by 31 points to 62%, indicating stronger momentum in the sector. Retail firms also reported a rise in confidence, with the figure increasing by 13 points to 53%.
Construction saw a confidence gain for the first time in five months, increasing 23 points to 58%. However, the service sector saw a decline for a third consecutive month, falling three points to 44%.
Amanda Dorel, regional director for the South East at Lloyds, said: “While overall confidence in the South East may have dipped this month, businesses are increasingly confident in their own prospects – a reflection of the innovation and resilience in our local business community.
“Local firms are setting out clear ambitions for the next stages of their growth, and we’ll continue to support them so they can deliver on these plans, whether that involves them expanding into new markets, launching new products or making fresh investments in their team.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, added: “Business confidence has risen following a fall in September, with trading prospects and economic optimism nearing the levels reported in the summer.
“Pricing pressures appear to have eased but continue to be driven primarily by general inflation and rising input and staffing costs.
“Over the course of this year, firms have demonstrated their resilience by adapting to challenges, despite higher labour costs, by focusing on hiring and workforce development.”
