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(Bloomberg) — U.K. business confidence rose at the fastest rate in 20 months as labor market pressures showed signs of easing, the holiday trading period beat expectations and businesses became more optimistic about the outlook for the economy.
Lloyds Bank Plc said its measure of sentiment among British companies rose to 17% in December, from 10% in November. It was the highest reading since July and the fastest monthly increase since April 2021.
The findings mark a sharp contrast with other industry surveys and official figures that suggest retail sales have fallen in recent weeks as transport strikes have made it more difficult for people to get to city centres. According to a report last week by S&P Global, purchasing managers are bracing for a prolonged recession.
Companies surveyed by Lloyds reported improved business prospects, although inflation and the risk of an economic slowdown still tempered their optimism. Executives also reported rising wage expectations – bad news for the Bank of England as it battles to contain double-digit consumer price inflation. More companies said they expect to raise prices next year.
Sentiment among manufacturing companies improved for the first time in seven months, rising nine points to 13%, while construction and services also ticked up. Lloyds said that, despite the challenges facing the UK economy, businesses were expecting better festive season than in 2021.
London-based firms were the least confident in the survey. In contrast to areas in northern England, where the recovery in confidence was most pronounced, businesses in the capital became more pessimistic in December than in the previous month.
Overall, business confidence is still below levels seen a year ago, when consumer demand saw a strong post-pandemic rebound and borrowing costs were low.
The Lloyd’s survey was carried out from November 28 to December 12 and counted 1,200 UK companies across all industry sectors and regions.
read more:
- UK firms face recession as manufacturing slumps
- UK consumer confidence is near record lows for an eighth month
- UK retail sales fell in November as the inflation crisis deepened
©2022 Bloomberg LP
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