The latest Business in Britain report from Lloyds Bank shows business owners in buoyant mood
Luckily for the business world, economic confidence is not linked to the nation’s sporting achievements. With the football team having their worst tournament in recent memory, Andy Murray beaten in straight sets and the cricket team completing a Brazil-esqe collapse, companies could be forgiven for letting their heads drop. Thankfully they operate in distinctly different circles – either that or business world is Formula 1 fans – and realise that, as far as the economy is concerned, the worst is well and truly behind us and the future is looking very healthy indeed.
The positivity that's flowing through the nation's enterprises is uncovered by a recent report from Lloyds Bank. The Business in Britain report, which took the views of 1,500 UK businesses, showed business confidence is at a 22-year high, with 52% of respondents noting an increase in new business and only 10% citing a decline. This clearly suggests that growth looks set to continue throughout the second half of 2014.
The net balance of overall sales during the past two quarters has also increased by 8%, equalling the all-time high seen in mid-2007, while the net balance of incoming orders also increased 8% to a record high of 42%. Given these figures, it's hardly surprising that the overall business confidence ratio - calculated using the average of the net balances of expected sales, orders and profits over the next six months - jumped to an all-time high of 53%, the fifth consecutive increase bi-yearly increase. This is reflected most strongly among companies with an annual turnover of below £1m, which have seen their net confidence balance rise by 15% to 49%.
While 61% of businesses expected orders to increase during the next six months, the hospitality & leisure sector remains the best performing industry after seeing a 4% rise in sales. However, construction and retail & wholesale, have thrived in recent months, shaking off their recession blues with a 15% and 19% increase in sales respectively.
These increases in sales helped drive profits over the first half of 2014, with construction enjoying a 25% boost and transport & communications also doing well (20%). Positivity is also reflected in recruitment as firms looks to make the most of the improved conditions. However, while all sectors state a potential increase in head count over the next six months, it is construction once again flying the flag as it looks to increase their staff numbers by 37%, a rise of 24% against Q1 and Q2 this year.
“Business sentiment is at historically record highs and hence there is a healthy appetite to invest as businesses are much more confident about their future trading prospects,” said Trevor Williams, chief economist at Lloyds Bank Commercial Banking.
“Moreover, the survey suggests that the current momentum in employment is set to continue over the second half of the year. These developments augur well for economic growth over the remainder of 2014.”
If it's of interest, the full Business in Britain report can be found here.