Expected staffing levels increase to a two-year high amid signs that labour shortages are easing.
Businesses continued their positive start to the new year,
These findings broadly echo the renewed optimism reported by businesses in recent weeks, highlighting an increased level of confidence in their prospective outputs over the next 12 months.
Business Confidence
Overall business confidence dipped marginally in February to 42% - down from 44% in January - but remains strong in relation to previous figures. Contextually, the long-term average for business confidence currently sits at 28% and with this month's figures standing significantly above that, there are still strong signs of positive sentiment from businesses.
Similar results were reported in relation to trading prospects and the broader economy. Although confidence in trading prospects slipped two points to 49%, falling from January's 51%, this is still the second-highest level since
Meanwhile, more than half (54%) of businesses reported higher levels of optimism compared to the proportion of businesses who felt pessimistic about the economy which was unchanged at 20%. These results leave the net balance down three points at 34% - still in positive territory.
Some businesses continued to express concerns about inflation and interest rates, although these concerns have eased significantly in recent months. February's survey data was collected in the aftermath of the attacks on
Employment Insights
Almost half (49%) of businesses surveyed said they expect to take on more employees in the year ahead. Conversely, only 13% expected to reduce headcount over the same period - the lowest reported figure since 2017. Respondents also tentatively signalled that labour shortages may have reduced in recent months, suggesting increased capacity to accommodate stronger demand. As a result, the net balance has increased by 3 points to 36%, which means expected staffing levels have risen to the highest level since
The Barometer also found that pay growth is falling gradually, although the pace of this fall appears to be gradual rather than swift. Indicators of pay growth within the Business Barometer survey have been elevated since the end of the furlough scheme in 2021. However, there are now signs of stabilisation at the higher thresholds.
Looking at the sectors, there is a mixed picture. There was a slight fall in confidence reported in the manufacturing and construction sectors, while retail and services stood their ground - remaining unchanged compared to January's figures. But despite the manufacturing and construction fall, businesses are still showing high levels of confidence.
'The split across the regions also provides reason to view the dip in confidence at the broader
Pricing Insights
In a sign that inflationary pressures have not entirely diminished, businesses pricing expectations increased after falling in the previous two months. This comes despite businesses' concerns about inflation easing. 61% (up from 60%) plan to increase their prices over the coming year, while only 3% (down from 4%) expect to charge less.
Sector Insights
There was a mixed picture for sectors this month. Confidence fell in manufacturing (nine points to 40%) and construction (seven points to 38%) respectively, although results remain higher than the same time last year. In contrast, the dominant services sector was unchanged compared to January at 45%, exceeding all months of 2023 except for November. Retail confidence was broadly steady, dipping one point to 41%.
'It's also very encouraging to see that businesses are keen to hire more staff - great news for the
'This level of confidence is encouraging and suggests businesses are open to investing in their future, and we have a team of experts on hand to offer support and guidance so we can help them, and
Regional insights
This month the most upbeat businesses can be found in
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