Business confidence in the UK has shown a strong upward trend, with economic optimism rising from 45% in July to 47% in August, according to the latest Lloyds Bank Business Barometer. This continued growth reflects an overall positive outlook for the economy as it moves into the second half of 2024.

Key Findings:

• Economic Optimism: Increased from 45% in July to 47% in August, continuing the upward trend throughout 2024.
• Trading Prospects: Remained strong at 54%, despite a slight dip from July’s 56%.
• Construction Sector: Saw a significant rise in trading prospects, jumping 14 points to 58%.
• Regional Confidence: The Northeast and Scotland reported the highest confidence levels, with 8- and 13-point increases respectively.
• Wage Expectations: Rose, with a third of firms (34%) anticipating at least a 3% pay increase.

Hann-Ju Ho, Senior Economist at Lloyds Bank Commercial Banking, commented on the findings: “As in July, we’ve seen a particularly strong outcome for business confidence. It remains at an elevated level of 50%, which is well above the long-term average of 29% – and it has been above the average for the past 15 months.

The construction sector led the charge in sector performance, with output expectations rising 14 points to 58%. The manufacturing and services sectors remained resilient, despite minor declines. Regionally, the Northeast and Scotland showed the most significant improvements in confidence, followed by London and the Northwest.

Paul Gordon, Managing Director for Relationship Management at Lloyds Bank Business & Commercial, added: “With business confidence levels remaining at an eight-year high, it is reassuring to know that UK firms are making strides in this space. It is great to see economic optimism rising steadily throughout the year, and we hope to see this continue.

Despite the overall positive outlook, there were some shifts in pricing and wage expectations. The number of firms planning to raise prices in the next year decreased slightly to 58%, down from 60% in July. However, wage growth expectations saw an uptick, with a third of businesses anticipating pay increases of at least 3%.

The Lloyds Bank Business Barometer, a key indicator of economic trends, suggests that the UK economy is on a stable footing as it moves into the latter half of 2024. Despite some cautionary notes on wages, the overall sentiment among businesses remains positive, reflecting a resilient and optimistic outlook for the months ahead.