The FINANCIAL — Business confidence slipped last month, but is still at a sharply higher level than at this time last year, according to the latest Lloyds TSB Corporate Markets Business Barometer.
"The survey – a monthly snapshot of company views on the outlook for the economy – shows that the number of firms claiming to be more optimistic about economic prospects fell in December. Just over half of businesses (52 per cent) said they were more upbeat about the economy than they were three months ago, and a fifth (19 per cent) said they were more pessimistic, resulting in a total balance of 33 per cent. Last month, by way of comparison, two thirds (67 per cent) were more optimistic and 16 per cent were more downbeat – a balance of 51 per cent," Lloyds TSB reported.
Despite December’s fall, the overall balance of firms expecting economic conditions to improve remained at a much higher level than at the end of 2008 and is far above the long run average balance for the survey of seven per cent.
Confidence levels do vary across the sectors. The balance of distribution firms reporting rising optimism rose ten per cent, to 38 per cent, while the balance for services businesses fell 13 per cent to 50 per cent. For industrial companies there was a slump of 55 per cent to zero, despite a more favourable exchange rate for exporters. However, in each case, the levels of optimism were much stronger than 12 months ago.
The picture is similarly varied across the regions. In the South, the balance of firms reporting growing confidence in the economic outlook slipped one per cent, while in the North and Midlands there were respective falls of 35 per cent and 26 per cent. Again, despite this month’s decline in confidence, overall optimism remains much higher in each region than at this time last year.
BUSINESS CONFIDENCE SLIPS, BUT GROWTH PROSPECTS REMAIN STRONG
Trevor Williams, chief economist, Lloyds TSB Corporate Markets, said: “Although confidence levels fell back at the end of the year, the context here is critical. Across the board, businesses are now far more optimistic about the economic outlook that than they were twelve months earlier.
“The fact that confidence is not on a smooth upward path is another reminder that the pace of recovery may be gradual and uneven, but it is clear that overall optimism amongst firms is still growing.”