Business confidence in London remained unchanged during July at 35%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the capital reported higher confidence in their own business prospects month-on-month, up eight points at 47%. When taken alongside their optimism in the economy, down seven points to 23%, this gives a headline confidence reading of 35%.
The City’s businesses identified their top target areas for growth in the next six months as evolving their offering (45%), introducing new technology (36%) and investing in their teams (36%).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of a third (33%) of businesses in London expect to increase staff levels over the next year, down six points on last month but still among the highest in the UK.
Overall UK business confidence fell three points during July to 25%. Firms’ outlook on their future trading prospects was up three points to 37%, but their optimism in the wider economy dropped nine points to 12%. The net balance of businesses planning to create new jobs also decreased, seven points to 21%.
Every UK region and nation reported a positive confidence reading in July, with four out of 11 recording a higher reading than last month. The East of England (up 15 points to 46%), West Midlands (up eight points to 38%) and Wales (up seven points to 30%) saw the biggest increases month-on-month, with the East of England now the most optimistic region overall.
Becci Wicks, regional director for London at Lloyds Bank Commercial Banking, said: “London firms’ resilience is once again on show this month, with confidence holding steady despite ongoing uncertainty in the market. But despite an encouraging picture right now, challenges undoubtedly lie ahead, and businesses need to remain on high alert to spot potential barriers to growth.
“Alongside this, firms should ensure they have strong working capital management and are closely monitoring cashflow, and have continuous dialogue with both customers and suppliers to understand any challenges they may be facing. We’ll remain firmly by the side of London businesses to help them continue this confidence into the weeks and months ahead.”
Business confidence declined across all four of the sectors in July, reflecting lower optimism about the economy. Confidence within manufacturing declined the most this month (20%/-12), with firms citing moderating trading prospects and a notable drop in economic optimism, but also issues with inflation and supply bottlenecks. There were small falls in confidence for construction (28%/-2), retail (25%/-6) and services (24%/-1).
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence declined this month, suggesting that economic headwinds are becoming more forceful. Despite this, firms’ assessment of their own trading prospects showed some resilience in the face of a challenging environment. Meanwhile, price pressures have shown no clear signs of a downward trend and there appears little sign yet that wage pressures are abating.”