Hiring intentions for the next year climbed to the highest level since 2015, despite cost pressures, according to the latest Lloyds Business Barometer.
The third consecutive monthly increase was driven by the services sector, which helped offset softer hiring signals in retail and manufacturing.
Sixty per cent of all businesses surveyed expect to hire more staff in the coming year, with 14% anticipating reducing employee numbers, increasing the net balance by 1 percentage point (pp) to 46%.
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Lloyds Bank’s survey covers a sample of 1,200 UK companies each month from all industry sectors, regions and firm sizes with annual turnover above £250,000.
Wage growth expectations declined by 2pp, the first decrease in three months, with one third of respondents (34%) forecasting average pay increases of 3% or more.
UK business confidence has climbed 1pp to 52% to reach its highest level since 2015. The July reading marked the third consecutive monthly increase and signalling growing optimism across the economy.
This uplift was driven by both stronger trading prospects and economic optimism, the latter reaching an 11-month high at 47% (+2pp), a consistent positive trend in recent months.
Hann-Ju Ho, senior economist for Lloyds Commercial Banking, said: “This continued upward trend reflects a growing sense of cautious optimism across the UK economy, underpinned by both improved trading prospects and broader economic sentiment.
“Despite ongoing cost pressures, firms are positioning for growth, particularly in services where hiring and investment plans are accelerating. Overall business confidence remains buoyant, with firms well placed to take advantage of opportunities such as new markets, adopting new technology and workforce expansion amid evolving market conditions.”
The service sector’s confidence increased by 11pp to 61%, one of the main drivers behind this month’s overall increase in business confidence. This gain was partially offset by declines in other areas, with retail firms down 8pp, manufacturers down 4pp and the construction sector down 6pp.
Six of the UK’s 12 regions saw a rise in confidence in July. Wales remained the most optimistic region, with the West Midlands and the North East seeing strong improvements. However, businesses in London were less confident, with a fall of 2pp, but the capital remains the third most confident region.
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