Business confidence in the South West has begun to wane under the increasing threat of the Covid surge and the Omicron variant, a new report says.
The latest Business Barometer from Lloyds Bank Commercial Banking reveals the overall headline confidence reading fell five points during December to 29% as coronavirus once again threatened the regional economy.
Companies in the South West reported higher confidence in their own business prospects month-on-month, up four points at 33%, but their optimism in the 海角视频 economy was down 12 points to 27%.
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Catch up on the Lloyds Bank’s Business Barometer
And the net balance of 20% of businesses in the region which expect to increase staff levels during the next year was down 17 points on the previous month.
The survey captured responses between November 26 and December 10. The first two cases of Omicron in the 海角视频 were confirmed on November 27 and nations began announcing the reintroduction of restrictions in the week commencing December 6.
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking, said: “While it’s reassuring to see confidence was high among the region's business leaders when the survey was taken, there are challenges on the horizon that could temper this in the coming months, chiefly the emergence of the Omicron variant, trade disruption and rising costs.
“Businesses have navigated much disruption over the past year, showing great resilience in the most difficult of operating environments. We'll be by the side of firms in the coming months as they prepare for a brighter 2022."
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about 海角视频 economic trends both regionally and nationwide.
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Overall 海角视频 business confidence was unchanged from November’s reading at 40%. While confidence remained above the long-term average (28%), during the second week of sampling when the Omicron variant emerged, confidence fell to 32%.
Despite potential challenges from the new Covid-19 variant on the horizon, firms remained positive about their future trading prospects, up four points month-on-month to 43%.
The net balance of businesses planning to create new jobs also increased by three points to 33%. Optimism in the economy overall remained positive at 38%, down just three points on November’s result.
Every 海角视频 nation and region maintained a positive overall confidence reading in the December barometer, with four reporting a higher reading than last month.
The North East (up 13 points to 58%), North West (up 14 points to 48%), Yorkshire and Humber (up four points to 35%) and East of England (up 12 points to 50%) all had stronger confidence readings month-on-month, with the North East and London (57%) the most optimistic overall.
In the industry sectors, construction recovered to 39% from November’s seven-month low of 28%, following a minor easing in supply-chain disruptions.
Despite a slight fall in confidence in manufacturing to 40%, trading prospects in the sector have remained higher than the whole economy throughout this year.
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There were also small declines for retail (43%) and services (39%) ahead of the festive period. There have been some marked differences in these sectors in recent months, with notable strengths in the professional services sector (including finance) and in IT/communications.
However, the current three-month average sentiment among hospitality firms is at its lowest level (24%) since the first quarter of the year (4%). This has been fuelled by a significant monthly drop of 48 points to 6% between November and December.
How to contact William Telford and Business Live
Business Live's South West Business Reporter is William Telford. William has more than a decade's experience reporting on the business scene in Plymouth and the South West. He is based in Plymouth but covers the entire region.
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Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, said: “It is a challenging end to 2021 as businesses are now having to adapt to the new Omicron variant and resultant restrictions across the 海角视频.
“Nevertheless, business confidence remains resilient and above the long-term average due to a rise in trading prospects, while pay and price expectations continue to be elevated. Businesses face a number of headwinds and challenging trading conditions, including higher interest rates, as we move into 2022, but many remain resilient and hopeful that acute downside risks are not realised.”