Business confidence in Wales fell six points during December to 26%, according to the latest Business Barometer from Lloyds.
While Welsh companies reported higher confidence in their own business prospects month-on-month, up three points at 37%, their optimism in the economy fell 15 points to 15%. Taken together, this gives a headline confidence reading of 26% (vs. 32% in November).
A net balance of 32% of businesses in the region also expect to increase staff levels over the next year, up 11 points on last month.
Looking ahead to the next six months, Welsh businesses identified their top target areas for growth as investing in their team, for example through training (37%), entering new markets (32%) and evolving their offering, for example by launching new products or services (31%).
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.
National picture
Overall UK business confidence fell two points in December to 39%, although remained above the long-term average of 29%.
While firms’ confidence in the wider economy strengthened five points to 31%, their confidence in their own trading prospects fell eight points to 47%.
London was the most confident UK nation or region in November (53%) for a second month in a row, followed by the North West (50%).
Sector Insights
Although confidence fell in the service sector, this was partly offset by rises in manufacturing and retail, with these sectors swapping places in December.
Services fell from 46% to 35% in December – a fall of 11 points. In contrast, manufacturing and retail increased 10 points to 42% and 43% respectively, thereby taking manufacturing and retail above services for the first time in 4 months. Trading prospects for retail rose for the first time in three months, while construction confidence was steady at 41%, equalling last month’s result.
Sam Noble, regional director for Wales at Lloyds said:
“While confidence has fallen this month, firms are still setting out clear plans for growth, and with more planning to hire – a move that would have benefits for businesses’ local communities and the Welsh economy, as well as the companies themselves.
“With the new year around the corner, we will continue to be by the side of Welsh businesses as they make the most of the new opportunities that 2025 will bring.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said:
“In the last few months overall confidence has fallen incrementally, and in December the trend continued as it fell by 2 points to 39%. While there hasn’t been any significant one-month change, confidence has gradually drifted from the summer’s highs.
“The key difference in this month’s results is that the fall in confidence is driven by firms’ own trading prospects which have proven to be resilient over the last quarter. There was, however, more positivity regarding the wider economy and, going into 2025, this offers some hope if companies continue to feel confident about the economy.
“Elsewhere, although confidence fell in the services sector, this was partly offset by improvements in manufacturing and retail – which could be a significant for this time of year.”
