Confidence among North East businesses slumped during August but bosses are still looking at ways to grow, according to new research.
More than 100 firms in the region were asked for their sentiments as part of the latest Business Barometer from Lloyds. It shows overall confidence fell 18 points to 55% during the month, bringing the region more in line with businesses nationally, where a two point rise to 54% was reported.
The figures were shaped by a fall in firms' confidence in their own prospects, month-on-month, which was down nine points to 68%. At the same time optimism in the wider economy was down 26 points 43%, giving the headline reading of 55% compared with 73% in July.
North East companies told researchers that their top target areas for growth, over the next six months, include introduction of new technologies such as artificial intelligence and automation (48%), breaking into new markets (42%) and investing in workforces, including through training (37%).
Nationally, manufacturing companies saw growth in confidence - up 14 points to 62%, a level previously seen in 2015. Retailers also reported a boost with confidence up 13 points to 57% - a five-month high. But construction firms reported a five point fall to 40%, which is a four-month low, and service sector operators saw an eight point fall to 53%.
Martyn Kendrick, regional director for the North East at Lloyds, said: "While confidence has moderated this month, businesses across the region still remain more positive than the national average. The region’s firms continue to set out plans for growth, whether that’s introducing new technology or investing in their people.
"These are the foundations for long-term success, and we’ll continue to provide on-the-ground support for businesses as they put these strategies into action."
The Lloyds research follows a separate survey from the Confederation of British Industry (CBI) painted a "grim picture" of the service sector in the quarter to August. It found mounting cost pressures and slowly rising average selling prices leading to a drop in profitability among businesses. Researchers there also found headcounts declining and a story of weak demand. In response, the CBI said the Government must start delivering short-term certainty to boost confidence if it is to achieve its long-term growth ambitions.
Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: "This continued upward trend in business confidence suggests º£½ÇÊÓƵ firms remain optimistic about their own trading prospects while there is a modest cooling of confidence in the wider º£½ÇÊÓƵ economy. Firms are focusing on what they can control, with many looking to pursue growth opportunities, including entering new markets and adopting new technologies.
"Wage expectations have seen a notable shift this month, but it remains to be seen whether this signals the start of a sustained trend or a temporary uplift, as they have been broadly stable in recent months."
