Bank of Scotland: Scottish business confidence rises and hiring intentions increase ahead of supply disruption
Business confidence in Scotland rose five points during September to 39%, the second consecutive month of growth, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
Scottish firms reported higher confidence in their own business prospects month-on-month, up 14 points at 39%. When taken alongside their optimism in the economy, down five points to 38%, this gives a headline confidence reading of 39%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide. This month’s survey was conducted before fuel disruption and ongoing supply chain issues tightened their grip.
Overall UK business confidence rose 10 points in September to 46%, with all regions and nations reporting double-digit confidence levels. The number of businesses planning on hiring new staff more than doubled from 18% to 37% as firms plan to increase headcount over the next 12 months.
Overall confidence in trading prospects rose by nine points to 43% and firms’ optimism in the economy increased by the same amount to 48%.
All bar three UK regions reported an increase in confidence with Wales (up 27 points to 46%) and Yorkshire and Humber (up 22 points to 48%) reporting the biggest jumps. Firms in the North West (down 17 points to 47%) and East of England (down nine points to 30%) reported falls in confidence but both remained comfortably in positive territory. Businesses in the South East reported no change month on month at 32%.
Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “While some protective measures remain in place, the easing of most lockdown restrictions has been a welcome boost for firms up and down the country. This has had a positive impact on several sectors as they return to normal trading
“Confidence remains solid and the number of firms planning to expand their teams is at the highest level recorded this year. While there are still challenges on the road to recovery, not least with the current fuel disruption, and supply and staff shortages, firms remain resilient and we’ll be by their side to help them in the months and years ahead.”
Confidence increased across the four broad sectors, notably in manufacturing and services. Manufacturing (up nine points to 49%) reached a four-month high, while services gained 11 points to 47%, the highest since early 2017, with particularly strong trading prospects in hospitality and financial & business services. Retail confidence improved by 8 points to a four-month high of 42%, while construction only edged up by 1 point to 41% which was nevertheless a three-year high.
Paul Gordon, managing director for SME and Mid Corporates, Lloyds Bank Commercial Banking, commented: “The economic growth outlook strengthened in the first part of September following rises in business confidence across nine of the 12 regions and nations.
“There are obvious challenges ahead in terms of labour availability, and the impact this has on the post pandemic recovery. It also remains to be seen how the recent events in the fuel market might impact businesses’ outlook. However we can seek comfort in recent progress across the sectors and of the levels of confidence recorded in manufacturing, hospitality and financial & business services.”
Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, added: “It remains encouraging to see a further improvement in business confidence reaching its highest level since April 2017.
“Employment expectations have risen significantly, with more than half of businesses expecting to recruit in the next 12 months. The hope is that the availability of labour will increase to alleviate current staff shortages for many firms, which will help to underpin UK economic growth over the medium term.”