Improvements were noted across all sector categories, with retail experiencing a 25-point surge to a post-pandemic high of 60%. Credit: Towfiqu barbhuiya on Unsplash.

A significant rebound in UK business confidence last month signals a positive shift in economic optimism and trading prospects, matching the highest levels of confidence seen in the past eight years, revealed Lloyds Bank’s latest Business Barometer.

The Barometer showed UK business confidence surging by nine points to 50% this month, mirroring the eight-year peak observed in May.

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This increase reversed the decline experienced in June and is buoyed by an improved outlook for trading prospects and economic optimism.

A notable 62% of businesses reported stronger activity, a rise from 53% in June, while only 6% anticipated weaker trading prospects, down from 9%.

The net balance for trading prospects specifically soared by 12 points to 56%, a figure not surpassed since April 2017.

Economic optimism also saw a rebound, with 62% of respondents expressing a more positive view of the economy, an increase from 55% in June.

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Staffing expectations followed suit, with over half of the businesses planning to expand their workforce, leading to a net balance rise of seven points to 39%, equalling the joint highest level since March 2017.

Despite the positive trends, expectations for wage growth presented a mixed picture. The proportion of businesses planning to offer pay rises of 3% or more climbed to 30%, yet this remained below the 37% observed in May.

Improvements were noted across all sector categories, with retail recording a 25-point surge to a post-pandemic high of 60%.

Manufacturing and services also saw significant gains, with manufacturing trading prospects reaching a two-year high and services climbing by ten points to 56%. Construction reported an increase of two points to 44%.

Regionally, nine out of 12 UK regions and nations reported stronger business confidence in July, with the East Midlands and Wales leading the monthly increases.

However, confidence dipped in the South-West, Yorkshire & the Humber, and the North West.

Lloyds Bank Business & Commercial managing director for relationship management Paul Gordon stated: “We’ve seen business confidence rebound in July, returning to the level we saw in May. Businesses may be feeling more resilient about their prospects which in the long term can help drive innovation and create jobs across the sectors. In retail, we’ve seen the highest level of confidence since the pandemic, which is a positive sign for a sector that has faced several challenges in recent years.”