British Business Confidence Grows in October, Boosting Hiring and Prices
According to the latest Lloyds Bank Business Barometer survey, British business confidence rebounded in October after a drop in September. The survey, which is often cited in the Bank of England’s quarterly reports on the economy, revealed that company bosses are planning to increase both their prices and their hiring.
The Business Barometer rose to its second-highest level of 2023 at 39%, up from 36% in September. This increase in confidence is likely to be a topic of discussion during the Bank of England’s interest rate meetings this week.
However, despite the positive outlook, companies are still cautious about safeguarding their profit margins. Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, explained that firms are taking measures to protect their margins due to the possibility of high interest rates, wage increase pressures, and the prospect of higher energy prices this winter.
The survey also revealed that pricing expectations have risen for a third consecutive month, reaching a new high for 2023. A significant 62% of firms are planning to increase their prices, while only 3% are planning to reduce them. This indicates that businesses are looking to pass on some of their increased costs to consumers.
Additionally, the survey found that companies expecting to raise their staffing levels also increased, rising by three points to 48%. This is a positive sign for job seekers as it indicates potential growth and increased hiring activity. Only 16% of companies surveyed planned job cuts, further underlining the overall positive sentiment.
Pay increase expectations remain high, suggesting that businesses are willing to invest in their workforce. This can be seen as a positive indicator for employee satisfaction and potential economic growth.
The Bank of England is expected to hold interest rates steady on Thursday, marking the second consecutive month of no change. This decision comes after a series of 14 back-to-back increases aimed at curbing high inflation.
Overall, the Lloyds Bank Business Barometer paints a relatively optimistic picture for the UK economy. The increase in business confidence, coupled with plans for hiring and price increases, suggests a positive outlook for future economic growth. However, concerns about protecting profit margins and potential challenges posed by energy prices and wage increases indicate that businesses are not without their reservations. The Bank of England’s decision to maintain interest rates at their current levels reflects a cautious approach to balance economic growth and inflation control.
More detail via Investing.com UK here… ( Image via Investing.com UK )