Business confidence in Wales rose four points during March to 29 per cent, as hiring intentions climbed to a five-month high, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Although firms’ optimism in the economy dropped eight points to 13 per cent, companies in Wales reported higher confidence in their own business prospects month-on-month, up 17 points at 45 per cent. Taken together, this gives a headline confidence reading of 29 per cent (25 per cent in February).

A net balance of 36 per cent of Welsh businesses also expect to increase staff levels over the next year, up 17 points from February – the country’s strongest hiring intentions since October 2023.

Looking ahead to the next six months, Welsh businesses identified their top target areas for growth as evolving their offering, for example by introducing new products or services (34 per cent), investing in their teams, for example by hiring new staff or investing in training (30 per cent), and introducing new technology, such as AI or automation (28 per cent).

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

Overall UK business confidence registered 42 per cent in March, the same as in February, as firms’ confidence in their own trading prospects (49 per cent) held steady, and confidence in the economy strengthened by one point (35 per cent).

Yorkshire and the Humber was the most confident UK nation or region in March (60 per cent), followed by the North East (56 per cent) and London (52 per cent).

Services confidence fell five points to 40 per cent, the first decline since December. That drop, however, was offset by rises in confidence in the manufacturing, retail and construction sectors.

The gains in manufacturing (up one point to 41 per cent) and construction (up two points to 40 per cent) were relatively modest and confidence remained below levels seen at the start of 2024. Firms in the retail sector reported improved confidence (up five points to 45 per cent), which was the strongest result for more than two years.

Sam Noble, regional director for Wales at Lloyds Bank Commercial Banking, said: “It’s great to see Welsh businesses feeling increasingly confident in their own prospects – a reflection of their resilience and the work they’ve done to capitalise on new opportunities for growth.

“And it’s particularly encouraging that so many firms are planning to hire. This will benefit their own companies, but also have a positive impact across communities, and the country as a whole.

“While firms’ outlook in the economy has become slightly more pessimistic, we could see this reverse if positive trends, such as slowing inflation, continue. Whatever lies ahead, and whatever firms have planned, we’ll continue to be by their side with our support.”

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “With businesses reporting 42 per cent confidence in March, this month’s figures maintain the recent improvement bringing a positive end to the first quarter of the year. Firms are showing increasing resilience which is reflected in their easing concern about supply chain disruption and energy prices.

“Businesses also continue to signal optimistic hiring intentions, although slightly down on previous months. It’s possible the impending minimum wage rises in April are beginning to come into sharper focus for businesses – especially smaller firms.

“Among the regions there was a mixed picture. Following unusually low confidence in February, London bounced back with a 14-point increase to bring the capital back in line with typical figures reported for the area, although the greatest confidence was shown by businesses in Yorkshire & the Humber who reported a 29-point rise, making it the most confident region overall. However, businesses in the Midlands saw a significant fall which seems to be an outlier compared to recent results.

“Overall, the Barometer across the quarter suggests that we could begin to see more optimistic economic growth in 2024 than seen in recent years, although medium-term challenges remain.”