Business confidence increases in October, says Lloyds

Business morale in Britain rose in October to the highest level since April, according to a bank survey.

The Lloyds business barometer index climbed to 37% in October from 24% in September, a post EU referendum high.

Hann-Ju Ho, senior economist at Lloyds bank commercial banking, said: “Our October survey shows a rise in overall confidence and suggests that the economy is on track to grow at a moderate pace in fourth quarter.

“Overall confidence reached its highest level since April driven by significant improvements in both business prospects and economic optimism.”

About 39% of businesses, up from 22% the previous month, said they expected their business prospects to improve over the coming year.

There was an increase in positive prospects to 46% from 37% and also a fall in negative prospects to 7% from 15%.

This was similar for economic optimism, which was up to 34% from 26%, the highest since March, due to a decrease in responses that were negative about economic prospects to 13% from 23%.

The share of businesses which expected an improvement in wider economic prospects fell to 47% from 49%.

The increase in overall confidence was reflected in a rise in sentiment to 46% from 14%.

The report comes after positive data released on Thursday by the Office for National Statistics, which showed third quarter gross domestic product grew by 0.5%, ahead of the 0.1% expected by the Bank of England in August.

Car maker Nissan also said it would build two new models at its Sunderland plant, after it secured “support and assurances” from the government, but it is unclear what those guarantees are.

However, it has been indicated that further monetary stimulus from the Bank of England and fiscal loosening from the Chancellor is expected as Brexit, after all, is yet to come.

The Lloyds index also found that in the business and other services sector, confidence rose to 46% to 14%, whereas sentiment in the industrial and consumer services sectors fell to 31% and 25%.

The number of business that said they had raised their domestic prices has averaged 19% in the last three months as companies could be increasing their prices due to downwards pressure on margins from the fall in sterling and higher import prices.

The company’s which reported higher margins averaged -8%, net 8% reported lower margins, during the last three months.

About 34% of respondents said they expected to increase their staff in the next year, a decrease from 39%. This reflected a 35% fall from 47% of companies which had expected to increase headcount in the next year, while those looking to reduce staff fell seven points to 1%.