UK business confidence weakens as cost pressures weigh on June outlook
British companies report weaker confidence in the economic outlook in June as cost pressures and broader uncertainty continue to affect sentiment. The decline is sharper in views on the wider economy than in firms' assessments of their own trading prospects, while hiring intentions improve for the first time in three months.
Highlights
- Lloyds' June business barometer shows overall UK business confidence dropping 3 points to +44, below the 12-month average of +47.
- Manufacturing sector confidence falls sharply by 10 points to +33, significantly underperforming its 12-month average of +46.
- Hiring intentions rise for the first time in three months, with 64% of firms expecting stronger output over the coming year despite weaker sentiment.
June survey signals softer economic sentiment
Lloyds says its latest business barometer shows overall business confidence falling by 3 points to +44 in June, below the 12-month average of +47. Confidence in the wider economy drops by 4 points to +31, also below its 12-month average of +38.Amanda Murphy, CEO for Lloyds Business and Commercial Banking, says cost pressures and global uncertainty continue to weigh on business confidence. She adds that international firms are more confident, with many seeing signs of easing supply chain disruption and stronger customer demand.
Businesses' optimism about their own trading outlook decreases by 2 points to +56, remaining close to its 12-month average of +57. Lloyds says 64% of firms expect stronger output over the coming year.
Manufacturing weakness contrasts with hiring plans
Manufacturing companies record one of the sharpest declines in the survey, with confidence falling 10 points to +33 in June, well below the sector's 12-month average of +46. The figures point to continued pressure on parts of the UK industrial base even as some companies report better demand conditions.The survey also shows hiring intentions for the next 12 months rising for the first time in three months, suggesting firms are still planning for expansion despite softer sentiment. Lloyds' data is based on online polling by Ipsos of 1,200 businesses with annual sales of at least 250,000 pounds, conducted from June 1 to June 15.
Our earlier report on UK shop price inflation in June noted that overall retail prices were unchanged at 1.2% year-on-year as slower food price growth offset increases in other categories. The article highlighted easing food inflation helped by seasonal promotions and strong crop conditions, while retailers still faced mounting cost pressures from taxes and higher input costs.
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