Proactive Investors - Business confidence fell by five points in May to 28%, the first fall in three months, according to the Lloyds Banking Group PLC (LON:LLOY) Business Barometer.
However, confidence levels remain in line with the barometer’s long-term average and firmly above last November’s low of 10%, the report showed.
The first decline since February was led by moderate falls in both firms’ own trading prospects and their optimism regarding the wider economy.
Confidence jumped in the South East but fell in other UK regions and nations, hiring intentions moderated slightly while firms’ wage and own pricing expectations continued to be elevated.
Manufacturing and retail confidence gains were offset by a pullback in services.
Firms’ assessment of strong trading prospects for the next twelve months fell for a second consecutive month, from 55% in April to 49% in May, but remain above levels seen earlier in the year (27% in January).
Optimism about the wider economy fell by six points to 22%, as 48% of companies (down from 53%) were more positive while 26% (up from 25%) were more negative.
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “As the economic environment remains challenging, compounded by stubborn inflation and higher wage pressures, business confidence has dipped slightly this month as firms feel cautious about the wider economy and their own trading prospects."