Business confidence in Scotland fell five points during June to 47%, according to the latest Business Barometer from Bank of Scotland.
While Scottish firms’ optimism in the economy held steady month-on-month at 48%, businesses reported lower confidence in their own trading prospects, down 10 points at 47%. Taken together, this gives a headline confidence reading of 47%, falling from 52% in May.
However, a net balance of 55% of Scottish businesses expect to increase staff levels over the next year, up 25 points on last month.
Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as evolving their offerings, for example by introducing new products or services (53%), investing in their workforce, for instance with more training (48%) and entering new markets (41%).
“Despite lower overall confidence, Scottish businesses are still setting out plans for growth – whether that’s through plans to hire, or steps like launching new products and services,” said Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking.
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Overall, UK business confidence increased one point in June to 51%, with firms’ optimism in their trading prospects gaining one point to reach 57%, while their confidence in the wider economy also rose one point to 45%.
The latest survey found that Wales was the most confident UK nation or region in June (67%), closely followed by London (64%).
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Overall, business confidence in the manufacturing and retail sectors saw significant gains this month, with 12-point rises in both sectors to 52%, which for manufacturing represents an 11-month high.
Meanwhile, construction and services saw decreases in confidence, with falls by five points and four points respectively.
“Business confidence has continued its positive momentum, following the significant gains we saw in May,” said Hann-Ju Ho, senior economist, Lloyds Commercial Banking.
“In particular, the sustained rise in hiring intentions suggests that while firms do still face challenges, they may be starting to look beyond short-term staffing needs and preparing for future growth.”
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