Business confidence in the North West slumped further in June as the local economy continued to be hit hard by the coronavirus outbreak.
According to Lloyds Bank Commercial Banking's business barometer, business confidence levels fell six points during June to -31%, and companies in the North West reported lower confidence in their business prospects month-on-month at -30%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
When asked about the impact of coronavirus on their business, a third (35%) said they expect to be operating at more than 50% of capacity by the end of June, although 10% didn’t expect to be operating at all. A quarter (25%) of firms said it would take 12 months until they were back to operating at pre-COVID-19 levels, with 20% expecting it to take up to three months.
Glenn Bemment, regional director for the North West, at Lloyds Bank Commercial Banking, said: “Firms across our region have been hit hard by this crisis and it’s clear that ongoing disruption and uncertainty is still weighing heavily on their outlook.
“However, it’s encouraging that some businesses are beginning to see an uptick in demand for their products and services. Optimism should be buoyed somewhat in the coming weeks as non-essential retailers restart and the hospitality sector opens back up, alongside further easing of social distancing measures.
“We remain by the side of North West businesses as they navigate the road to recovery.”
According to the barometer, the majority of firms continued to see demand fall during June, but the picture did improve month-on-month.
Three quarters of firms experienced a drop in demand for their products and services, down four points on May. Meanwhile, 11% experienced an increase in demand, up five points on the month before.
Of the 78% of businesses reporting disruption to their supply chain during June, 32% expected the situation to improve within three months, while only 2% expected it would take more than 12 months to return to normal levels.
Across the UK, business confidence grew marginally month-on-month, rising three points to -30%. The West Midlands was the least pessimistic region at -18%, followed jointly by Yorkshire & the Humber and the North East at -23%. Scotland was the most pessimistic, with confidence dropping eight points month-on-month to -41%.
In June, the construction sector rebounded strongly, increasing 30 percentage points to -14%.
The retail sector increased two points to -23% and manufacturing saw an improvement at -35%. These were the highest levels seen since March, however, other services fell to -36% largely reflecting the impact on the hospitality and education sectors.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, added: “While the results suggest the economy may be starting to see some improvement, trading conditions remain difficult for most firms as the majority are still experiencing disruption to supply chains.
"Hopefully the recent Government announcement of further relaxation of restrictions and the slight easing of social distancing measures will enable more businesses to reach their capacity and resume their usual activities, which we would expect to be reflected in further improvements to optimism next month.”
