Tuesday’s survey showed that sentiment among British businesses rose in May, with the exception of businesses dealing with consumers most exposed to the rising cost of living crisis.
The Lloyds Bank Business Barometer rose in May to 38% from 33% in April, its first rise since February, despite concerns about a slowing economy, Reuters reports.
Other surveys – such as the closely watched S&P Global Purchasing Managers’ Index (PMI) of business activity – pointed to a sharp slowdown in the economy in May.
The Lloyd’s survey brought conflicting news about inflation pressures. And while the proportion of companies planning to raise prices fell by a percentage point to 57%, payment intentions remained strong.
About 16% of companies plan to raise wages by 4% or more in the next year – a high percentage by Lloyd’s survey criteria.
Other surveys have shown larger increases in wages. Human resources data firm XpertHR reported that half of the wage deals offered increases of 4% or more in the three months through the end of April, the highest median wage settlement since 1992.
Sentiment improved in the construction and manufacturing sectors, but in the retail sector, it fell to its lowest level since March 2021 when non-essential stores were still closed due to COVID restrictions.
“Business confidence has improved this month and it appears that companies in general are able to rebuild some of their margins through price increases,” said Han Ju-ho, chief economist at Lloyds Commercial Banking. “Consumer-facing industries, such as retail, are not feeling the same rise in confidence amid widespread reports of pressures on household incomes.”
Consumer prices rose 9.0% year-on-year in April, the largest rise since 1982, according to official data published earlier this month.
The Lloyd’s survey showed that improvement in business confidence was strongest in London.
Lloyd’s surveyed 1,200 companies with annual sales of at least 250,000 pounds ($316,200) between May 3 and May 17.