A more upbeat picture from the UK’s construction sector came in July, with rising confidence and stronger demand – says Lloyds' new Business Barometer.

The report said firms saw a 10 point increase in overall business confidence to 56% in July with more than half of those surveyed (54%) stating stronger customer demand was their main reason for optimism in the economy. This was followed by improving interest rates and financial conditions, cited by 38% of firms.

More than two-thirds (68%) of construction firms expect their business activity to increase in the coming year, up slightly from 67% in June. Just under two-thirds (65%) are planning to increase their staff levels over the same period, up from 55% in from June.

The latest business confidence figures track above the 12-month average of 47%. This was driven by stronger customer demand, improving financial conditions and industry-specific improvements.

Max Jones, director and head of construction at Lloyds, said: “The latest rise in confidence suggests construction firms are becoming more willing to plan beyond the next project. After a period of uncertainty, it’s encouraging to see that firms are beginning to invest in people and the capacity they'll need to support future demand, signalling a sector that's looking ahead rather than reacting to today's market conditions."

The improving UK picture was also driven by an increase in economic optimism, reflecting the decline in global energy prices, the Bank of England holding interest rates and the announcement of an interim peace agreement in the Middle East at the time of the survey.

Regionally confidence rose in seven of the UK’s 12 regions and nations, with the North-east, Yorkshire and Humber and the West Midlands all reporting strong increases and leading the rankings. However, sentiment fell in the South-west, Scotland, Northern Ireland and London. The East of England saw the biggest increase, up 30 points to 53%. Wales and the South East also saw notable improvements.

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