North East Business Confidence Rallies In March

Business confidence in the North East rose two points during March to 56%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the North East reported higher confidence in their own business prospects month-on-month, up 11 points at 67%. When taken alongside their optimism in the economy, down seven points to 46%, this gives a headline confidence reading of 56% (vs. 54% in February).

North East businesses identified their top target areas for growth in the next six months as investing in their team, for example by investing in training (54%), entering new markets, for example by diversifying into new markets or exporting to new ones (35%), and introducing new technology, such as automation or AI (34%).

A net balance of 58% of businesses in the region also expect to increase staff levels over the next year, up eight points on last month.

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

National picture

Overall UK business confidence registered 42% in March, the same as in February, as firms’ confidence in their own trading prospects (49%) held steady, and confidence in the economy strengthened by one point (35%).

Yorkshire and the Humber was the most confident UK nation or region in March (60%), with the North East following next behind, ahead of London (52%) and the East of England (48%).

Sector Insights

Services confidence fell 5 points to 40%, the first decline since December. That drop, however, was offset by rises in confidence in the manufacturing, retail and construction sectors.

The gains in manufacturing (up 1 point to 41%) and construction (up 2 points to 40%) were relatively modest and confidence remained below levels seen at the start of 2024. Firms in the retail sector reported improved confidence (up 5 points to 45%), which was the strongest result for over two years.

North East business have now been more confident than the national average for six months in a row.

Despite slightly more pessimism when it comes to the wider economy, businesses are increasingly bullish when it comes to their own plans. This a reflection of the hard work we know so many have been doing to build a foundation for future growth – a foundation that they’re now looking to capitalise on by further investing in their teams, and broadening their reach into markets.

As they put these strategies into action, we’ll continue to be by their side.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said:

“With businesses reporting 42% confidence in March, this month’s figures maintain the recent improvement bringing a positive end to the first quarter of the year. Firms are showing increasing resilience which is reflected in their easing concern about supply chain disruption and energy prices.

“Businesses also continue to signal optimistic hiring intentions, although slightly down on previous months. It’s possible the impending minimum wage rises in April are beginning to come into sharper focus for businesses – especially smaller firms.

“Among the regions there was a mixed picture. Following unusually low confidence in February, London bounced back with a 14-point increase to bring the capital back in line with typical figures reported for the area, although the greatest confidence was shown by businesses in Yorkshire & the Humber who reported a 29-point rise, making it the most confident region overall. However, businesses in the Midlands saw a significant fall which seems to be an outlier compared to recent results.

“Overall, the Barometer across the quarter suggests that we could begin to see more optimistic economic growth in 2024 than seen in recent years, although medium-term challenges remain.”