Business confidence in Scotland rose 15 points during October to 54%, according to the latest Business Barometer from Bank of Scotland.
Companies in Scotland reported higher confidence in their own business prospects month-on-month, up 16 points at 61%. When taken alongside their optimism in the economy, up 12 points to 46%, this gives a headline confidence reading of 54% (vs. 39% in September).
A net balance of 63% of businesses in the country also expect to increase staff levels over the next year, up six points on last month.
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 (63%), evolving their offering, for example by introducing new products or services (38%) and introducing new technology, such as AI or automation (35%).
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 climbed eight points in October to 50%.
Firms’ optimism in their own trading prospects rose 11 points to 62%, while their confidence in the wider economy climbed six points to 39%.
The North East and West Midlands were the joint-most confident of any UK nation or region in October (both 62%), followed by London (60%).
Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking
Sector Insights
October saw the manufacturing sector’s confidence increase by 31 points to 62%, indicating stronger momentum in the sector. Retail firms also reported a rise in confidence, with the figure increasing by 13 points to 53%. Construction saw a confidence gain for the first time in five months, increasing 23 points to 58%. However, the service sector saw a decline for a third consecutive month, falling three points to 44%.
Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “It’s great to see business confidence in Scotland on the rise again. And what’s particularly encouraging is that more Scottish firms than anywhere else in the UK are planning to make investments in their teams over the next six months, and that more firms are planning to hire.
“These kind of investments in people have benefits that extend far beyond individual businesses. As firms press ahead with their growth strategies, we’ll continue to provide our support their next steps.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “Business confidence has risen following a fall in September, with trading prospects and economic optimism nearing the levels reported in the summer. Pricing pressures appear to have eased but continue to be driven primarily by general inflation and rising input and staffing costs.
“Over the course of this year, firms have demonstrated their resilience by adapting to challenges, despite higher labour costs, by focusing on hiring and workforce development.”
Paul Kempster, Managing Director for Commercial Banking Coverage, Lloyds Business & Commercial said: “It’s encouraging to see confidence returning to manufacturing and construction sectors. Both play a key role in our national prosperity. As we look towards the end of the year, we can hope that this confidence continues and materialises into further gains for the economy both at a regional, but also national, level.
“As we head into the busiest time of year for retailers, it’s positive to see their confidence rise at the start of the ‘golden quarter’. More broadly, it’s good to see confidence across all sectors higher on average this year than last year.”