Scottish business confidence takes a knock amid supply chain woes
Confidence north of the Border fell eight points during October to 31 per cent, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
Companies reported lower confidence in their own business prospects month-on-month, down one point at 38 per cent. When taken alongside their optimism in the economy, down 16 points to 22 per cent, this gives a headline confidence reading of 31 per cent.
Meanwhile, a net balance of 30 per cent of businesses in Scotland expect to increase staff levels over the next year, down three points on the previous month.
Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “October has been a challenging month for businesses across Scotland with fuel and staff shortages combined with continued shipping disruption presenting significant headwinds.
“Despite this, overall levels of business confidence remain solid at 31 per cent as firms display the resilience needed to keep operations running.
“While challenges persist, we’ll remain by the side of Scottish businesses to support and hopefully bolster the positive momentum we’ve seen throughout the year,” he added.
The Business Barometer questions some 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Overall UK business confidence remained steady month-on-month dipping by just three points to 43 per cent and remaining comfortably above the year-to-date average of 26 per cent.
Hiring intentions were unchanged on September’s reading at 37 per cent, while firms’ optimism in the economy (down four points to 44 per cent) and confidence in their own business prospects (down one point to 42 per cent) fell marginally.
From a sector perspective, confidence remained strongest in manufacturing, rising to a five-month high of 51 per cent (up two points), with trading prospects being particularly positive. Additionally, 68 per cent of manufacturing firms are planning on bringing all furloughed staff back which is more than any other sector.
Business confidence in retail and services fell slightly to 37 per cent (down five points) and 43 per cent (down four points) respectively, although they remain higher than three months ago.
Paul Gordon, managing director for SME [small and medium-sized enterprise] and mid corporates, Lloyds Bank Commercial Banking, said: “There has been some fluctuation in confidence recently due in part to the supply-chain pressures facing firms. However, it is promising to see the majority of regions and nations have seen an uptick in confidence over the last three months.
“Manufacturing confidence continues to rise through positive trading and employment prospects, and we hope that this cadence follows into other sectors.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, added: “While economic optimism saw a slight dent in October due to rising costs and the on-going supply chain issues, it is clear that firms are still feeling relatively buoyant as overall business confidence remains high and above the long-term average.”
The barometer’s measure of overall business confidence is the average of responses about how businesses regard the economic outlook and their own trading prospects.
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