Business confidence in the West Midlands fell four points during August to 15 per cent but the region is the most confident in the UK, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the West Midlands reported slightly lower confidence in their business prospects, which fell two points to 17 per cent and lower economic optimism which fell eight points to 11 per cent. Together, this gives an overall confidence of 15 per cent.

In contrast, businesses’ hiring intentions was up three points on last month, with a net balance of 16 per cent of firms in the region expecting to hire more staff during the next year.

Across the UK, overall confidence slipped to one per cent, as businesses became less optimistic towards the economic outlook, while confidence in their own prospects fell to eight per cent.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Amanda Dorel (pictured), regional director for West Midlands at Lloyds Bank Commercial Banking, said: “Despite business confidence slipping this month, it is encouraging to see that the West Midlands is the most confident region in the UK, with businesses here continuing to demonstrate their ambitions for growth.

“In the current climate, it’s understandable that economic optimism among businesses has decreased and confidence around firms’ prospects has also dipped slightly. However, the increase in firms’ hiring intentions shows they are moving to prepare for upcoming opportunities to develop and prosper.

“Regardless of what’s on the horizon for Midlands businesses, we’ll continue to be by their side and have pledged £1.2 billion to support them throughout 2019.”

Across the region, a net balance of six per cent of businesses said they felt that the UK’s exit from the European Union was having a positive impact on their expectations for business activity, remaining the same on a month ago.

The South West had the second highest confidence (11 per cent) followed by London (seven per cent).

Those in Scotland were the least confident, with an overall confidence of minus nine per cent, 10 points below the national average.

In August, business confidence in the construction sector rose by six points to 12 per cent.

Meanwhile, overall confidence fell by 16 points to three per cent in the manufacturing sector, and by 11 points to six per cent in retail, the lowest levels seen for those sectors this year. Confidence was also down 15 points to minus three per cent in the services sector, bringing it near to the February low of minus four per cent.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “We have seen a dip in overall business confidence this month, with firms appearing less positive about their own trading prospects and the broader economy, and remaining low against the historic average. 

“While ongoing economic uncertainty is likely a key driver, it’s worth noting that companies’ assessment of the expected impact on their business of the UK leaving the EU has remained broadly unchanged this year.”