Scottish business confidence at the highest level since last June

Scottish business confidence has risen by 14 points during May to 42%, which is the highest reading since June 2021.

However, the latest Business Barometer from Bank of Scotland Commercial Banking found that Scottish businesses reported lower confidence in their own business prospects month-on-month, down three points at 31%.

When taken alongside their optimism in the economy, up 31 points to 52%, this gives a headline confidence reading of 42%.

Scottish businesses flagged a range of growth opportunities for the next six months, including entering new markets (38%), evolving their offering (34%), introducing new technology (23%) and investing in their staff (23%).

Around 1,200 businesses are surveyed each month, with a net balance of 39% expecting to increase staff levels over the next year, up 13 points on last month.

Overall UK business confidence increased by five points during May to 38% – its highest level since February.

From a sector perspective, retail confidence fell two points to 27%, remaining lower than the all-sector average of 38% in the last three months.

The confidence level is also the lowest since March 2021, as pressure on household real incomes weigh on spending prospects.

In contrast, there was a 21-point rise in construction to 54%, while manufacturing sentiment remained resilient, up two points to 45%.

Confidence in the services sector reached a three-month high, increasing four points to 36%.

Fraser Sime, regional director for Scotland at the Bank of Scotland Commercial Banking, said: “While the past few months have presented a myriad of challenges for Scottish firms, it’s encouraging to see business confidence continue to rise in May.

“This will be the first restriction-free summer in Scotland since 2019 and firms will need to closely manage their working capital to ensure they are ready for any peaks and troughs in demand – doing so will ensure they remain resilient and can take advantage of what we hope can still be a profitable period for businesses up and down the country. ”

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