Business Confidence in the UK Falls
LONDON (Reuters) – British business confidence fell to its lowest level of 2024 in December, yet employers showed increased optimism about the wider economy, according to a survey published on Monday. Separate data indicated a pre-Christmas rise in hiring and pay.
The Lloyds Bank Business Barometer, which measures confidence among companies, decreased by 2 points to 39%, although it remains above its long-run average of 29%.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, noted that the decline extended a trend downward since the summer. He commented, "The key difference in this month's results is that the fall in confidence is driven by firms' own trading prospects." However, there was a more optimistic view concerning the overall economy, which offers hope if companies maintain confidence going into 2025.
Britain's economy experienced contraction in September and October, marking the first consecutive monthly declines in output since the COVID-19 pandemic. Employers expressed concerns regarding the new government's first budget, announced on October 30.
Last week, the Bank of England forecast zero growth in gross domestic product for the final quarter of 2024, while keeping interest rates unchanged as it awaited clarity on inflation impact from budget tax increases.
Lloyds' gauge of price intentions rose slightly in December, remaining well above the long-term average.
Meanwhile, a separate survey suggested that the labor market was regaining momentum ahead of the Christmas holidays. Online jobs website Adzuna reported its measure of growth in vacancies increased by 2.3% in November compared to October, largely driven by the logistics sector.
Average salaries advertised on Adzuna rose by 6.5% year-on-year, marking the biggest increase since April 2021. Official data indicated unexpected pay growth across the economy at 5.2%, significantly higher than the 3% rate the BoE considers stable for inflation.
However, Andrew Hunter, co-founder of Adzuna, cautioned that employment trends might soon reflect the budget's impacts and the broader economic slowdown. He stated, "Right now we are seeing a very competitive hiring landscape, yet we expect that the wider macroeconomic environment may begin to impact hiring figures early next year."
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