Business confidence rises for the fifth consecutive month
The IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, rose to -5 in April 2023, up from -13 the previous month. This is the fifth consecutive month in which the index value has improved, following a low of -64 in November 2022. The value of the index is now similar to immediately before the invasion of Ukraine in February 2022 (-4).
The IoD conducts its member surveys monthly and publishes the results of the 1st of each month, providing the most timely indication of business sentiment in the UK economy.
The data for April 2023, released today, suggests growth across all major business indicators, consolidating the improvements recorded in March, as detailed below [numbers may not add due to rounding]
- The index of director confidence in the future prospects for their own organisations steadied at +42 in April, compared to +44 in March and +41 in February.
- 39% expected to raise levels of investment in their business in the next year, compared to 19% who expected to reduce it, giving a net positive result of +20, a little higher than the +18 recorded in March.
- 56% expected revenues to rise in the next year, compared to 20% who expected revenues to fall, giving a net positive result of +37, lower than the +42 recorded in March but similar to February (+38).
- 37% expected to increase their headcount in the next year, compared to 14% who expected to reduce it, giving a net positive result of +22, similar to the +23 recorded in March.
- 20% expected their levels of exports to increase in the next year compared to 9% who expected exports to fall, a net positive result of +11. This is the first month that a tracker question about export volumes has been included.
However, the survey also showed that inflation expectations remain high. Only a quarter (25%) of members said that they believed inflation had already peaked, down from 28% in March. There was a corresponding slight rise in the proportion of business leaders who thought inflation would either peak in the Summer or Autumn of this year, up from 30% to 33% between March and April.
Kitty Ussher, Chief Economist at the Institute of Directors, said:
“Business confidence in the UK economy is much improved compared to the end of last year, and continues to strengthen, despite business leaders also expecting high inflation to persist. It is particularly reassuring to see a recovery in investment intentions, raising the hope that the economic fundamentals can continue to improve in the months ahead.”
The IoD Directors’ Economic Confidence Index measures the net positive answers from members of the Institute of Directors to the question ‘How optimistic are you about the wider UK economy over the next 12 months?’ on a five-point scale from ‘very optimistic’ to ‘very pessimistic’.
New data points will continue to be made available on the first day of each month containing data obtained from a survey of IoD members that is in the field during the previous month.
Full survey results
949 responses from across the UK, conducted between 11th-27th April 2023. 16% ran large businesses (250+ people), 28% medium (50-249), 22% small (10-49 people), 30% micro (2-9 people) and 14% sole trader and self-employed business entities (0-1 people).
How optimistic are you about both the wider UK economy and also your organisation over the next 12 months?
|
|
Very optimistic
|
Quite optimistic
|
Neither optimistic nor pessimistic
|
Quite pessimistic
|
Very pessimistic
|
Don’t know
|
|
Wider UK economy
|
3.9%
|
30.7%
|
26.1%
|
30.8%
|
8.3%
|
0.2%
|
|
Your (primary) organisation
|
11.3%
|
46.2%
|
25.7%
|
12.9%
|
3.0%
|
1.1%
|
Comparing the next 12 months with the last 12 months, what do you believe the outlook for your organisation will be in terms of:
|
Much higher
|
Somewhat higher
|
No change
|
Somewhat lower
|
Much lower
|
Don’t know
|
Net positive
|
|
|
Business investment
|
5.3%
|
33.4%
|
41.1%
|
13.4%
|
5.3%
|
1.6%
|
20.0%
|
|
Headcount
|
3.1%
|
33.6%
|
47.7%
|
11.9%
|
2.5%
|
1.2%
|
22.2%
|
|
Revenue
|
8.5%
|
47.8%
|
22.4%
|
16.8%
|
3.1%
|
1.4%
|
36.6%
|
|
Exports
|
4.1%
|
15.6%
|
56.3%
|
6.1%
|
2.5%
|
15.4%
|
11.1
|
At what point, if at all, do you expect the rate of inflation in the UK to peak before starting to fall back again?
|
Inflation has already peaked
|
24.9%
|
|
Spring 2023
|
11.9%
|
|
Summer 2023
|
19.7%
|
|
Autumn 2023
|
14.2%
|
|
Winter 2023-2024
|
9.3%
|
|
Spring 2024
|
6.8%
|
|
Summer 2024
|
3.2%
|
|
Later than Summer 2024
|
3.2%
|
|
Never
|
0.5%
|
|
Don’t know
|
6.3%
|
