A relaxation of Covid restrictions boosted the mood of Scottish businesses during August, according to a monthly optimism barometer.
Bank of Scotland (BoS) said the monthly gauge jumped by six percentage points to 34% last month, thanks to a 20-point surge in confidence about the nation’s economic prospects, to 43%, as more businesses were able to shake off some of the shackles of the pandemic.
The country is taking great steps towards recovery and growth.”
Fraser Sime, Bank of Scotland.
But firms were less optimistic about their own outlook, reporting “marginally lower confidence” and, in turn, reducing the overall positive impact, the bank said.
Meanwhile, the overall confidence reading for the whole UK reached 36% – its highest level since May 2018.
Scottish firms’ hiring intentions jumped 13 points, with 34% now planning to create jobs in the next 12 months.
Normal trading
Bank of Scotland Commercial Banking regional director Fraser Sime said: “With most of the Covid-19 restrictions easing in August, businesses across Scotland were able to return to normal trading for the first time in 18 months and are feeling optimistic about what this means for the economy.
“With confidence on the up and even more firms now planning on making new hires, the country is taking great steps towards recovery and growth.”
The bank’s monthly Business Barometer questions 1,200 firms throughout Britain and provides early signals about UK economic trends, both regionally and UK-wide.
When asked about their overall trading prospects, UK firms reported a six-point increase on July’s reading at 34% and their confidence in the wider economy also increased by six points, to 39%.
The most confident regions on the overall measure were north-west England (64%), north-east England (46%) and London (41%).
All bar three areas reported growth in confidence in August, with the East Midlands, West Midlands and Yorkshire & Humber down 10 points to 28%, off three points at 27% and lower by two points to 26% respectively.
BoS said there was “notable strength” in sectors benefiting from the further easing of Covid restrictions.
Services confidence saw the greatest month-on-month increase UK-wide, rising by eight points to 36% – the highest level since January 2018.
Manufacturing shrugs off disruption woes
Confidence in both manufacturing and construction also picked up – both up seven points to 40%, with BoS – part of Lloyds Banking Group (LBG) – citing an improvement in trading prospects for the year ahead.
The increase in manufacturing confidence came despite ongoing supply disruptions, although the level remains below the high seen in May.
‘Many of the regions have seen significant upticks’
Gareth Oakley, managing director for business banking at LBG subsidiary Lloyds Bank, said: “Since the start of the year business confidence has been increasing, and August has been a particularly strong month. Many of the regions have seen significant upticks.
“It is clear there is still some level of uncertainty on inflation and the impact of price pressures, but with further boosts to confidence in the services, manufacturing and construction sectors we can be hopeful that demand across all sectors will drive consumption throughout the rest of the year.”
‘Staff shortages remain a challenge’
Lloyds Bank Commercial Banking senior economist Hann-Ju H said: “Business confidence reaching its highest level in over four years tells a positive story about the country’s economic recovery. This confidence is driven by the continued success of the vaccine rollout, the removal of lockdown restrictions and adjustments to self-isolation rules.
“Staff shortages remain a challenge, but as the economy moves back towards pre-pandemic levels we can be optimistic that the momentum for business confidence and economic optimism can be sustained in the months ahead.”
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