While companies in the North West reported lower confidence in their own business prospects month-on-month, down ten points at 54%, their optimism in the economy climbed ten points to 49%. Taken together, this gives a headline confidence reading of 52%, unchanged from April (52%).
However, a net balance of 46% of businesses in the region expect to increase staff levels over the next year, up three points on last month.
Looking ahead to the next six months, North West businesses identified their top target areas for growth as evolving their offering, for example by introducing new products or services (47%), investing in their team, for example through training (46%) and entering new markets (45%).
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.
Overall, UK business confidence increased 11 points in May to 50% – its highest level since August 2024.
Firms’ optimism in their own trading prospects strengthened six points to 56%, while their confidence in the wider economy also climbed 16 points to 44%.
The East Midlands was the most confident UK nation or region in May (66%), followed closely by the North East (65%).
Construction firms’ confidence rose to a nine-month high of 56%, while those in the service sector reported a one-year high of 54%. Manufacturing confidence also rose by two points to 40%. However, retail confidence fell by five points to 40%, the lowest level since January this year.
Chris Whittle, area director in the North West at Lloyds, said: “The North West has now outperformed the national average for ten months in a row – a reflection of the tenacity, resilience and ambition of our region’s businesses.
“Local firms will be pressing ahead with their growth plans, and we remain ready to support their next steps with our tailored, on-the-ground support.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “The rebound in business confidence suggests that firms might be in a stronger position for the next quarter. The rise in confidence is driven by a sharp increase in economic optimism, reflecting the recovery in financial markets amid more promising prospects for potential global trade agreements.
“Equally as encouragingly is the fact that trading prospects, wage expectations and hiring intentions also saw improvements this month. The positive trends in these metrics are important signals for potential growth and resilience in the business community and the wider economy. While we know that fluctuations do occur month on month and the global economic outlook remains uncertain, this month’s increase in confidence is an encouraging sign.”