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UK hiring intentions at record high; business output also increases
The UK economy is in a strong position as new data shows hiring intentions at record levels and business output at its highest in seven months, according to the latest Business Trends Report by accountants and business advisors BDO LLP.
BDO’s Output Index, which measures UK business output, increased to 100.05 from 99.78. This is above the long-term growth trend of 100, and the highest reading the index has recorded since August of 2017. The increase has been driven by an improvement in both UK manufacturing and services output.
Although BDO’s Optimism Index – which shows how firms expect output to develop in the coming six months – dropped slightly to 102.26 this month, the fall was not enough to dampen the hiring intentions of UK firms.
BDO’s Employment Index increased to 112.09 from 111.89 in March, which is the highest reading in the history of the BDO Business Trends Report, and suggests the trend will persist. The index’s continued upward climb is likely driven by firms’ investment in people over capital, during a period of low wage growth.
A combined strong performance from the services and manufacturing industries has been a key driver for UK businesses’ progress. BDO’s manufacturing output sub-index rose more than two points to 105.91 in March, from 103.85. BDO’s services output sub-index also increased, rising to 99.30 from 99.26 in February. The boost to both industries is likely a result of strengthening domestic outlook, after inflation eased substantially in February.
Commenting on the BDO Business Trends Report’s findings, Tom Lawton, Partner and Head of BDO Manufacturing, said: “The performance of both the manufacturing and services sectors is encouraging for the health of the UK economy and the data suggest that there will be an improvement in GDP growth over the next few months.
Businesses are retaining a positive outlook, and this may add to the pressure that the MPC feels to raise rates. But the recovery remains patchy and febrile with Brexit looming. The MPC must hold fast and keep interest rates to a minimum to encourage confidence and growth for UK businesses.”
BDO’s New Economy report can be downloaded below