Martyn Kendrick

Companies in Scotland reported slightly lower confidence in their own business prospects month-on-month, down five points at 65%. However, when taken alongside their optimism in the economy, up nine points to 52%, this gives a headline confidence reading of 59% (vs. 56% in July).

A net balance of 70% of businesses in the country also expect to increase staff levels over the next year, up 47 points on last month.

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team, for example through training (59%), evolving their offer, for example by introducing new products or services (39%) and entering new markets (39%).

Overall, UK business confidence rose two points in August to 54%. While firms’ confidence in the wider economy dropped three points to 44%, their optimism in their own trading prospects rose five points to 63%.

London was the most confident part of the UK in August (69%), followed by the East of England (64%).

Manufacturing firms saw confidence up 14 points this month, to 62%. This level was previously seen in 2015. Retailers also saw an increase in confidence this month, with levels up 13 points to 57%, a five-month high. However, construction firms confidence fell by five points to 40%, a four-month low while confidence in service sector firms also fell eight points to 53%.

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “It’s encouraging to see Scottish business confidence continuing to strengthen, outpacing the UK average for a fourth month in a row.

“The strong focus on team investment and widespread hiring plans demonstrates that Scottish firms are taking a long-term view of growth, building the capabilities they need for sustained success. We’ll continue to provide our support to help businesses across the country achieve their ambitions.”

Hann-Ju Ho, senior economist, Lloyds Commercial Banking, said: “This continued upward trend in business confidence suggests UK firms remain optimistic about their own trading prospects while there is a modest cooling of confidence in the wider UK economy.

“Firms are focusing on what they can control, with many looking to pursue growth opportunities, including entering new markets and adopting new technologies.

“Wage expectations have seen a notable shift this month, but it remains to be seen whether this signals the start of a sustained trend or a temporary uplift, as they have been broadly stable in recent months.”

Paul Kempster, managing director for Commercial Banking Coverage, Lloyds Business & Commercial, said: “August’s figures show a build on business confidence. Opportunities continue to lie ahead for businesses, whether that be upskilling their workforce or exploring new markets.

“While confidence isn’t rising evenly across all sectors and regions, it’s encouraging to see positive sentiment holding well above the long-term average.”