Confidence in the region is close to record low

Confidence in the region fell by 12 points last month as Yorkshire firms do their best to stay afloat during the coronavirus crisis.

Yorkshire companies reported lower confidence in their own business prospects month-on-month at minus 21 per cent. When taken alongside their views of the economy overall, this gives a headline confidence reading of minus 31 per cent.

The majority of the region’s firms saw demand negatively affected during May, but the picture improved month on month.

More than two thirds (69 per cent) of the region’s firms experienced a fall in demand for their products and services, down seven points on the month before. Meanwhile, 12 per cent experienced an increase in demand, up one point on April’s figure.

Paul Varley, regional director for Yorkshire & the Humber at Lloyds Bank Commercial Banking, said: “Yorkshire firms are gripped by the challenges Covid-19 is posing, and are increasingly concerned about their trading prospects and the wider economy.

“But there are encouraging signs here. Yorkshire had the highest number of operational businesses of all regions in the UK during May, with the latest figures indicating that closed firms are beginning to reopen. As this happens, supply chain disruption will be curbed and demand stimulated for goods and services.”

The number of firms in the region operating at less than 50 per cent capacity rose 15 points to 64 per cent. Nearly one in 10 (8 per cent) said they weren’t operating at all, down from 24 per cent in April.

Of the 73 per cent of businesses reporting disruption to their supply chain during May, 31 per cent expected the situation to improve within three months, while 4 per cent expected it would take more than 12 months to return to normal levels.

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

Looking at the whole of the UK, business confidence held steady month-on-month, dipping one point to minus 33 per cent. The North East and London both saw confidence rise month-on-month, scoring the joint highest confidence reading at minus 20 per cent.

The South West recorded the lowest confidence at minus 51 per cent, followed by the South East at minus 45 per cent.

Despite all being in negative sentiment, six of the 12 regions reported a higher confidence in May.

In May, the construction sector saw the sharpest decline of any sector, falling 24 percentage points to minus 44 per cent.

However, all the three other major sectors saw a modest increase. The retail sector increased eight points to minus 25 per cent, while manufacturing rose to minus 27 per cent and services saw a small increase of four points to minus 18 per cent.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “Despite the results partly capturing the period since the Government’s announcement of an initial easing of restrictions, trading conditions remain difficult for most firms.”