Lloyds Bank Commercial Banking

Lloyds Bank Commercial Banking

October 02, 2013 06:35 ET

Confidence in the UK Economy Is at an All Time High

LONDON, UNITED KINGDOM--(Marketwired - Oct. 2, 2013) -

The Lloyds Bank Business Confidence Barometer 'monthly snapshot' for September shows:

  • UK companies' optimism about the UK economy is at an 11 year high in September with more than two thirds of companies indicating they have greater optimism than three months ago

  • Businesses' confidence in their own trading prospects fell marginally but the overall quarterly average is at the strongest level since the end of 2007

  • Both indices, taken together, point to the potential for economic growth to remain strong and even accelerate in the second half of the year to 0.8 per cent quarter-on-quarter growth in Q3 2013 and 1 per cent quarter-on-quarter growth in Q4 2013

  • More than two fifths of companies plan to increase staff levels in the coming year

  • The industrial sector (manufacturing and construction) and the South have the strongest economic prospects in Q3 2013, though all sectors and regions have seen prospects improve since the start of the year

Business confidence in the economy increased to the highest level since the Lloyds Bank Business Confidence Barometer started in 2002. More than two thirds (68 per cent) of companies said that they were more optimistic about how the economy would fare compared with three months ago.

The net balance of businesses that are optimistic about economic prospects - which weighs up the percentage of firms that are now more optimistic than they were three months ago against those that are more negative - increased by 3 points to 57 per cent in September. Further analysis shows a five percentage point increase, to 68 per cent, in the number of businesses that are more optimistic about the economy than they were three months ago. Only 11 per cent of businesses said they were less hopeful about the economy, which is a marginal increase from August when nine per cent of businesses were pessimistic about the economy.

Businesses show a marginal drop in confidence in their own future trading prospects

Businesses had a marginal drop in confidence towards their own trading prospects over the next twelve months. Just under two thirds (59 per cent) of firms said that they expect trading prospects to improve, which is unchanged from August, while there was a slight increase of one point to four per cent that expected a fall in their trading prospects. The overall net balance of 55 per cent is down one point from last month. However despite the drop, the quarterly average is at the strongest level since late 2007, prior to the height of the global financial crisis.

Taken together, both indices indicate that economic growth could accelerate to around 0.8 per cent quarter-on-quarter in Q3 2013 and preliminary indications point to a 1.0 per cent quarter-on-quarter growth in Q4 2013. If subsequently this is reflected in official statistics, this may sustain the challenges that the Bank of England Monetary Policy Committee face in implementing its forward guidance policy.

Staff levels likely to increase

Following an increase in confidence towards the economy, 43 per cent of businesses plan to increase staff levels in the coming year while 5 per cent expect to reduce them. The resulting net balance of 38 per cent is the highest since 2011.

The industrial sector feels bullish

Business confidence towards the economy increased across all sectors with the industrial sector (which includes manufacturing and construction businesses) showing the strongest increase in confidence (63 per cent) over the past three months compared to 42 per cent in Q2. This sector is now outperforming both the consumer services (42 per cent) and business & other services (50 per cent) sectors.

South leads in confidence

Furthermore, the overall balance for business confidence towards the economy continues to be strong in the South (58 per cent) and is ahead of the Midlands (48 per cent). Economic prospects in the North (41 per cent), while lagging behind the South and Midlands, has also improved this year.

Trevor Williams, Chief Economist, Lloyds Bank Commercial Banking, said: "Businesses are more positive about the economy than at any time since the end of the recession. This is likely to translate into robust growth in the second half of the year."

Notes to editors:

  • The overall "balance" of opinion weighs up the percentage of firms that are positive in outlook against those that are negative. Responses are re-weighted to reflect the composition of the economy.
* The industrial sector in this report represents manufacturing production, mining, utility and construction businesses, business & other services consists of public services and financial & business services, and the consumer services sector comprises retail, wholesale, hotels & catering and transport & communications services.

The Business Barometer results provide signals for economic growth up to six months ahead. The Business Barometer's net balance for economic confidences leads other 'early' signals of economic activity such as the composite PMI survey and the OECD's composite leading indicator (CLI) for the UK by two and four months, respectively.

The survey started in January 2002 and research is carried out monthly on behalf of Lloyds Bank by BDRC Continental. This survey was conducted with around 300 companies with turnover above £1 million between 2nd and 16th September 2013 from all sectors and regions of Great Britain.

http://www.lloydsbankcommercial.com/economic-research/

Barometer questions

Are you presently more optimistic about the economy than you were three months ago?


Optimistic


Same


Pessimistic

Net balance (per cent)


Monthly change
September 2013 68 21 11 57 3
August 2013 63 28 9 54 13
July 2013 61 19 20 41 5
June 2013 54 28 18 36 -3
May 2013 57 25 18 39 12
April 2013 44 39 17 27 7
Mar 2013 46 28 26 20 7
Feb 2013 44 25 31 13 -2
Jan 2013 40 35 25 15 - 5
Dec 2012 47 26 27 20 3
Nov 2012 42 33 25 17 0
Oct 2012 43 31 26 17 7
Sep 2012 40 30 30 10 0
Aug 2012 40 30 30 10 18
July 2012 30 32 38 -8 4
June 2012 27 34 39 -12 9
May 2012 22 35 43 -21 -47
Apr 2012 48 30 22 26 -5
Mar 2012 51 29 20 31 30
Feb 2012 38 25 37 1 12
Jan 2012 31 25 42 -11 12
Dec 2011 30 17 53 -23 -3
Nov 2011 27 26 47 -20 -5
Oct 2011 34 17 49 -15 -22
Sep 2011 40 27 33 7 10
Aug 2011 34 29 37 -3 -22
July 2011 46 27 27 19 -17
Do you expect trading prospects for your company to increase in the next year?


Optimistic


Same


Pessimistic

Net balance (per cent)

Monthly change
September 2013 59 37 4 55 -1
August 2013 59 38 3 56 1
July 2013 59 37 4 55 4
June 2013 53 45 2 51 12
May 2013 48 43 9 39 -4
Apr 2013 46 51 3 43 2
Mar 2013 46 49 5 41 9
Feb 2013 41 50 9 32 -14
Jan 2013 50 46 4 46 6
Dec 2012 44 52 4 40 5
Nov 2012 43 49 8 35 9
Oct 2012 40 46 14 26 -17
Sept 2012 51 41 8 43 3
August 2012 47 46 7 40 10
July 2012 44 42 14 30 -6
June 2012 44 48 8 36 1
May 2012 45 45 10 35 -8
Apr 2012 50 43 7 43 3
Mar 2012 47 46 7 40 -1
Feb 2012 50 41 9 41 8
Jan 2012 44 45 11 33 16
Dec 2011 31 55 14 17 -14
Nov 2011 41 49 10 31 -6
Oct 2011 46 45 9 37 3
Sep 2011 46 42 12 34 4
Aug 2011 47 36 17 30 -16
Staff levels, Profit margins and Domestic prices - Net
balance (per cent)*
(The below calculations are based on whether respondent felt more optimistic than pessimistic about staff levels, profit margins, and domestic prices)

Staff levels

Profit margins

Domestic prices
September 2013 38 -15 14
August 2013 31 -8 11
July 2013 33 -12 13
June 2013 31 -9 13
May 2013 16 -9 14
Apr 2013 18 -12 17
Mar 2013 23 -8 10
Feb 2013 24 -17 7
Jan 2013 26 -23 9
Dec 2012 27 -23 9
Nov 2012 19 -23 10
Oct 2012 10 -27 7
Sept 2012 17 -14 15
August 2012 19 -18 8
July 2012 10 -19 5
June 2012 30 -19 5
May 2012 21 -15 7
Apr 2012 23 -17 13
Mar 2012 28 -11 12
Feb 2012 18 -26 15
Jan 2012 13 -26 16
Dec 2011 9 -27 -1
Nov 2011 16 -28 12
Oct 2011 14 -35 13
Sep 2011 21 -17 18
Aug 2011 17 -12 19
Jul 2011 23 -15 16
Do you expect trading prospects for your company to
increase in the next year - Net balance (per cent)

North

Midlands

South
September 2013 38 53 65
August 2013 49 53 62
July 2013 46 56 60
June 2013 45 44 60
May 2013 32 46 37
Apr 2013 30 46 48
Mar 2013 47 44 37
Feb 2013 25 45 28
Jan 2013 45 40 50
Dec 2012 36 22 54
Nov 2012 32 40 31
Oct 2012 15 45 25
Sept 2012 38 53 43
August 2012 26 46 43
July 2012 32 25 34
June 2012 31 35 39
May 2012 33 41 30
Apr 2012 52 39 40
Mar 2012 53 43 29
Feb 2012 22 29 58
Jan 2012 31 19 40
Dec 2011 18 10 24
Nov 2011 28 23 37
Oct 2011 22 44 44
Sep 2011 42 27 38
Aug 2011 26 20 48
Jul 2011 55 46 37
Do you expect trading prospects for your company to increase
in the next year - Net balance (per cent)


Industrial

Consumer
Services

Business & Other Services
September 2013 64 41 60
August 2013 55 55 59
July 2013 65 54 49
June 2013 50 49 53
May 2013 52 31 37
Apr 2013 64 43 27
Mar 2013 51 39 35
Feb 2013 38 27 33
Jan 2013 47 44 45
Dec 2012 30 47 43
Nov 2012 35 34 35
Oct 2012 18 24 33
Sept 2012 49 33 49
August 2012 49 37 36
July 2012 22 31 36
June 2012 34 43 30
May 2012 37 30 37
Apr 2012 44 46 38
Mar 2012 49 28 44
Feb 2012 30 41 50
Jan 2012 36 29 34
Dec 2011 25 23 8
Nov 2011 35 30 27
Oct 2011 30 38 43
Sep 2011 29 34 39
Aug 2011 37 21 34
Jul 2011 38 34 60

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