Business confidence in Scotland fell 13 points during November to 31%, according to the latest Business Barometer from Bank of Scotland.
Companies in Scotland reported lower confidence in their own business prospects month-on-month, down two points at 43%. When taken alongside their optimism in the economy, down 25 points to 18%, this gives a headline confidence reading of 31% (vs. 44% in October).
Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team, for example through training (57%), evolving their offering, for example by introducing new products or services (41%) and introducing new technology, such as AI and automation (28%).
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 dipped slightly in November to 41% – down three points from October’s 44% – but remained above the long-term average of 29%.
While firms’ confidence in their own trading prospects strengthened two points to a net balance of 55%, their confidence in the economy fell nine points to 26%.
London was the most confident UK nation or region in November (57%), followed by the West Midlands (51%).
Sector Insights
Firms in the manufacturing sector reported the first rise in trading prospects in four months, with the net balance up three points to 49%. Companies in construction and services also indicated stronger business growth outlooks with net balances of 56% (up six points) and 61% (up four points), respectively. Retail firms, however, signalled softer prospects for a second month running, with the trading prospects’ net balance down six points at 45%.
Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “While business confidence has fallen this month, Scottish firms are identifying fresh avenues for growth – whether that’s by investing in new technology, or developing new skills.
“We’ll continue to be by their side to help them achieve their ambitions. This will include helping businesses make the investments they need to make the most of any seasonal spikes in demand, and to lay the foundations for an even stronger new year.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “In November, the overall confidence metric fell by three points for the third month running. This is the lowest level since June, but still above the survey’s long-term average, which is ultimately positive from a longer-term perspective.
“These results suggest that while firms have mixed views about the economy, they see their businesses in a good place to cope with any challenges they might face. Hiring intentions, although moderating this month, haven’t fallen by much which is also positive news.
“Overall, these results show that businesses are still positive and feeling resilient, albeit with tempered views on the economic outlook”.
Paul Kempster, Managing Director for Relationship Management, Lloyds Banking & Commercial, said: “It’s clear that businesses are feeling confident in themselves, evidenced by their buoyant trading prospects, which is great news for the UK.
“There has been an improvement in manufacturing – for the first time in four months – as well as construction and services which is welcome news, considering our sectors can play a huge role in boosting economic growth.
“Despite a fall in some of the regions, it is encouraging to see resilience elsewhere. But no matter where businesses are based, we are here to support and continue helping them – and Britain – prosper.”
