Business barometer

Scots firms’ confidence rises despite headwinds

Manufacturers are more positive

Business confidence in Scotland rose 11 points during April with more firms expecting to hire staff and expand into new markets despite inflationary and supply chain pressures.

Companies reported higher confidence in their own business prospects month-on-month, up 16 points at 34%, alongside their optimism in the economy, up five points to 21%.

Scottish businesses flagged a range of growth opportunities for the next six months, including investing in their team, expanding into new markets and evolving their offer. 

The figures have emerged in the latest Business Barometer from Bank of Scotland Commercial Banking which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

A net balance of 26% of businesses in Scotland expect to increase staff levels over the next year, up 17 points on last month.  

Overall, UK business confidence remained unchanged during April, at 33%. Firms’ outlook on their future trading prospects rose five points to 39%, but their optimism in the economy dipped slightly on March’s reading (down from 32% to 26%). The net balance of businesses planning to create new jobs also decreased by six points to 26%. Every UK region and nation reported positive confidence readings in April.

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Rising levels of inflation coupled with growing cost pressures have hit businesses hard in recent months. The retail sector has been particularly impacted by these turbulent economic conditions, forcing many firms to start increasing prices.

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“But despite these headwinds, Scottish firms have shown tremendous resilience as business optimism rebounds in April. ”

From a sector perspective, manufacturing confidence increased by eight points to 43%, erasing part of the 19-point decline in March, helped by somewhat stronger trading prospects.

Retail and services confidence, however, were little changed on the month and is weaker than at the start of the year, with businesses increasingly concerned about the outlook for the wider economy.

Retail confidence edged up one point to 29%, while services confidence was unchanged at 32%. Construction confidence fell for a second month to 33%, but is still on a par with the all-sector average.

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