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Business confidence rallied to an eighteen-month high in August, led by a rebound in economic optimism, according to the Lloyds Business Barometer.
The rise was driven principally by a marked rebound in economic optimism more than offsetting last month's fall, while firms' own trading prospects strengthened for a third month in a row.
"We’ve seen a strong rebound in confidence, now higher than at any time since the Russian invasion of Ukraine and well above the long-run average. Business optimism is helped by the outlook on peak interest rates and the direction of travel on inflation," says Paul Gordon, MD for Relationship Management at Lloyds Bank Business & Commercial Banking.
The same survey revealed businesses' hiring intentions rose to a fifteen-month high in a sign that the labour market is likely to remain 'tight' and consistent with elevated inflationary levels.
"Expected staffing levels bounced back, with half of companies anticipating an increase in headcount for the year ahead. The share of companies expecting a pay increase for their workforce rose to a new high, while own price expectations picked up," said the report.
In a troubling sign for the Bank of England, price expectations increased in August with the net balance moving up 3 points to 56%, though it remained below last
December’s high of 58%.
The increase reflected 61% of companies (up from 57%) intending to raise their prices in the coming year and 5% (up from 4%) expecting to reduce them.