Market Overview

Businesses Continue to Feel Bullish About the Economy

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LONDON, ENGLAND--(Marketwired - Oct. 3, 2013) - Business confidence in the economy rose strongly last month and is at the highest level since February 2010, according to the latest Lloyds Bank Commercial Banking Business Barometer. Sentiment regarding firms' own trading prospects also improved, to its strongest level since October 2007.

The net balance of businesses that are optimistic about economic prospects - which weighs up the percentage of firms that are now more optimistic than they were three months ago against those that are more negative - increased by 13 points to 54 per cent in August. Further analysis shows a two percentage point increase, to 63 per cent, in the number of businesses that are more optimistic about the economy than they were three months ago. While in comparison only nine per cent of businesses said they were less hopeful, which is a significant drop from July when 20 per cent of businesses were pessimistic about the economy.

Businesses remain confident about their own trading prospects

Businesses remain upbeat about their own trading prospects over the course of the next year with the net balance of this index edging up by one point to 56 per cent in August following a four point rise in July. The index continues to be at its highest level since October 2007. The share of positive responses was unchanged from last month at 59 per cent, while negative responses dropped by one point to three per cent. Taken together both indicators point to a robust outlook for economic activity over the rest of the year, following the 0.3 per cent and 0.7 per cent quarter-on-quarter increases in GDP during Q1 and Q2 respectively.

This view is supported by the sector and regional breakdowns of both indices which show that the latest gains have been broad-based across all sectors and UK regions.

The average of both balances for the industrial, consumer services and business and other services(i) sectors has increased by 11, 16 and 22 points to 60 per cent, 49 per cent and 58 per cent respectively over the last three months. The same period has seen corresponding gains of four, 22 and 24 points in the Midlands, North and South to 54 per cent, 46 per cent, and 62 per cent respectively.

Staff levels stabilise this month

The survey also asks about firms' expectations of a change in staff levels over the next year compared to the previous twelve months. After a "bounce" in June, the net balance has been stable for the last two months. This may indicate a wish by firms to boost productivity through using the existing workforce to meet any pick up in demand. However, this stability masks differing sector and local trends. In particular, the reported outlook for hiring in consumer services which includes retail sales and distribution has softened since June, while prospects in business and other services and the South has picked up.

Trevor Williams, Chief Economist, Lloyds Bank Commercial Banking, said: "Over the past few months, businesses have become increasingly confident about the wider economy and their own trading prospects which augurs well for the UK's future economic prospects."

Notes to editors:

The overall "balance" of opinion weighs up the percentage of firms that are positive in outlook against those that are negative. Responses are re-weighted to reflect the composition of the economy.

(i) The industrial sector in this report represents manufacturing production, mining, utility and construction businesses, business & other services consists of public services and financial & business services, and the consumer services sector comprises retail, wholesale, hotels & catering and transport & communications services.

The Business Barometer results provide signals for economic growth up to six months ahead. The Business Barometer's net balance for economic confidences leads other 'early' signals of economic activity such as the composite PMI survey and the OECD's composite leading indicator (CLI) for the UK by two and four months, respectively.

The survey started in January 2002 and research is carried out monthly on behalf of Lloyds Bank by BDRC Continental. This survey was conducted with around 300 companies with turnover above GBP 1 million between 5th and 15th August 2013 from all sectors and regions of Great Britain.

http://www.lloydsbankwholesale.com/

Barometer questions



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Are you presently more optimistic about the economy than you were three
months ago?
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Net balance Monthly
Optimistic Same Pessimistic (per cent) change
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August 2013 63 28 9 54 13
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July 2013 61 19 20 41 5
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June 2013 54 28 18 36 -3
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May 2013 57 25 18 39 12
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April 2013 44 39 17 27 7
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Mar 2013 46 28 26 20 7
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Feb 2013 44 25 31 13 -2
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Jan 2013 40 35 25 15 - 5
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Dec 2012 47 26 27 20 3
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Nov 2012 42 33 25 17 0
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Oct 2012 43 31 26 17 7
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Sep 2012 40 30 30 10 0
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Aug 2012 40 30 30 10 18
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July 2012 30 32 38 -8 4
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June 2012 27 34 39 -12 9
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May 2012 22 35 43 -21 -47
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Apr 2012 48 30 22 26 -5
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Mar 2012 51 29 20 31 30
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Feb 2012 38 25 37 1 12
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Jan 2012 31 25 42 -11 12
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Dec 2011 30 17 53 -23 -3
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Nov 2011 27 26 47 -20 -5
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Oct 2011 34 17 49 -15 -22
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Sep 2011 40 27 33 7 10
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Aug 2011 34 29 37 -3 -22
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July 2011 46 27 27 19 -17
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Do you expect trading prospects for your company to increase in the next
year?
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Net balance Monthly
Optimistic Same Pessimistic (per cent) change
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August 2013 59 38 3 56 1
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July 2013 59 37 4 55 4
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June 2013 53 45 2 51 12
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May 2013 48 43 9 39 -4
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Apr 2013 46 51 3 43 2
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Mar 2013 46 49 5 41 9
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Feb 2013 41 50 9 32 -14
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Jan 2013 50 46 4 46 6
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Dec 2012 44 52 4 40 5
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Nov 2012 43 49 8 35 9
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Oct 2012 40 46 14 26 -17
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Sept 2012 51 41 8 43 3
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August 2012 47 46 7 40 10
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July 2012 44 42 14 30 -6
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June 2012 44 48 8 36 1
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May 2012 45 45 10 35 -8
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Apr 2012 50 43 7 43 3
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Mar 2012 47 46 7 40 -1
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Feb 2012 50 41 9 41 8
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Jan 2012 44 45 11 33 16
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Dec 2011 31 55 14 17 -14
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Nov 2011 41 49 10 31 -6
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Oct 2011 46 45 9 37 3
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Sep 2011 46 42 12 34 4
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Aug 2011 47 36 17 30 -16
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Staff levels, Profit margins and Domestic prices - Net balance (per cent)(i)
(The below calculations are based on whether respondent felt more
optimistic than pessimistic about staff levels, profit margins, and
domestic prices)
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Staff levels Profit margins Domestic prices
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August 2013 31 -8 11
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July 2013 33 -12 13
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June 2013 31 -9 13
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May 2013 16 -9 14
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Apr 2013 18 -12 17
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Mar 2013 23 -8 10
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Feb 2013 24 -17 7
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Jan 2013 26 -23 9
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Dec 2012 27 -23 9
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Nov 2012 19 -23 10
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Oct 2012 10 -27 7
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Sept 2012 17 -14 15
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August 2012 19 -18 8
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July 2012 10 -19 5
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June 2012 30 -19 5
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May 2012 21 -15 7
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Apr 2012 23 -17 13
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Mar 2012 28 -11 12
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Feb 2012 18 -26 15
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Jan 2012 13 -26 16
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Dec 2011 9 -27 -1
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Nov 2011 16 -28 12
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Oct 2011 14 -35 13
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Sep 2011 21 -17 18
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Aug 2011 17 -12 19
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Jul 2011 23 -15 16
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Do you expect trading prospects for your company to increase in the next
year - Net balance (per cent)
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North Midlands South
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August 2013 49 53 62
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July 2013 46 56 60
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June 2013 45 44 60
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May 2013 32 46 37
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Apr 2013 30 46 48
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Mar 2013 47 44 37
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Feb 2013 25 45 28
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Jan 2013 45 40 50
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Dec 2012 36 22 54
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Nov 2012 32 40 31
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Oct 2012 15 45 25
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Sept 2012 38 53 43
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August 2012 26 46 43
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July 2012 32 25 34
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June 2012 31 35 39
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May 2012 33 41 30
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Apr 2012 52 39 40
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Mar 2012 53 43 29
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Feb 2012 22 29 58
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Jan 2012 31 19 40
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Dec 2011 18 10 24
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Nov 2011 28 23 37
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Oct 2011 22 44 44
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Sep 2011 42 27 38
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Aug 2011 26 20 48
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Jul 2011 55 46 37
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Do you expect trading prospects for your company to increase in the next
year - Net balance (per cent)
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Consumer Business & Other
Industrial Services Services
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August 2013 55 55 59
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July 2013 65 54 49
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June 2013 50 49 53
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May 2013 52 31 37
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Apr 2013 64 43 27
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Mar 2013 51 39 35
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Feb 2013 38 27 33
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Jan 2013 47 44 45
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Dec 2012 30 47 43
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Nov 2012 35 34 35
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Oct 2012 18 24 33
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Sept 2012 49 33 49
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August 2012 49 37 36
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July 2012 22 31 36
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June 12 34 43 30
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May 2012 37 30 37
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Apr 2012 44 46 38
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Mar 2012 49 28 44
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Feb 2012 30 41 50
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Jan 2012 36 29 34
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Dec 2011 25 23 8
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Nov 2011 35 30 27
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Oct 2011 30 38 43
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Sep 2011 29 34 39
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Aug 2011 37 21 34
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Jul 2011 38 34 60
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FOR FURTHER INFORMATION PLEASE CONTACT:
Shella Ali
020 7356 2014 / 07795 611154
shella.ali@lloydsbanking.com


25 Gresham Street, London EC2V 7HN
customerservice@lloydstsb.com

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