Business confidence rebounded sharply in July, a survey revealed, as firms felt a renewed sense of optimism about the UK’s economic prospects.
Overall business confidence jumped by nine points to 50 per cent this month, according to Lloyds’ Business Barometer.
The rebound in confidence during July brought business confidence back up to May’s level, which was the highest level since before the Brexit referendum.
Firms reported a much stronger outlook for their trading prospects, with 62 per cent of businesses reporting stronger activity, up from 53 per cent in June.
Wider economic optimism, meanwhile, rebounded with 62 per cent of respondents feeling more confident about the economy’s prospects. This was up from 55 per cent previously.
“This month shows that businesses are feeling more confident, buoyed by their positive trading prospects and economic outlook,” Hann-Ju Ho, senior economist at Lloyds’ commercial bank.
“Retail-focused businesses were the main driving force behind the positive rise in trading prospects and these results tally with the improvement we have seen in consumer confidence,” he added.
The rapid rebound from June’s confidence dip suggests that the downturn could have been a result of temporary factors, such as uncertainty generated by the election. If the resurgence is sustained, the survey suggests that the UK’s surprisingly strong performance so far this year may continue.
Paul Gordon, managing director for relationship management at Lloyds said higher confidence would help “drive innovation and create jobs across the sectors” in the months ahead.
Lloyds’ survey is another positive leading indicator for the economy as it enters the second half of the year. The UK was the fastest growing G7 economy in the first quarter of the year and most economists expect to see strong growth in the second quarter too.
Households are seeing a healthy increase in real wages on the back of falling inflation while interest rate cuts are on the horizon too. This should contribute to a healthy tailwind for consumer spending.