Business Trends

10 May 2021

Service sector confidence soars as vaccine roll-out continues

  • Continued vaccine rollout and lifting of lockdown restrictions drives surge in BDO’s Optimism Index to 14 month high
  • Services sector confidence improved following reopening of outdoor hospitality, gyms and non-essential retail in April
  • Output in manufacturing also grows, but Brexit concerns still have an impact

The continued success of the UK’s vaccination rollout programme combined with the easing of lockdown restrictions led to a 14-month high in services sector confidence in April, according to the latest monthly Business Trends report.

BDO’s Services Optimism Index rose by 1.36 points in April from 98.50 to 99.86, driven by the lifting of restrictions on indoor entertainment venues including restaurants, cinemas, children’s play areas and the rest of the accommodation sector including hotels and hostels. This contributed to a rise in the overall BDO Optimism Indexfor the third consecutive month from 98.31 to 99.85, just below the long-term average level of 100. The increase in optimism suggests there is confidence that the country’s roadmap out of lockdown will go ahead  as planned.

This optimism wasn’t just confined to the services sector. BDO’s Manufacturing Optimism Index rose by 2.97 points to reach 99.79 in April, again driven by increased demand as the country continues to ease out of lockdown. 

Elsewhere in the report, the BDO Output Index continued to improve with large gains in the Services Output Index and the Manufacturing Output Index. Driven by a combination of the easing of restrictions that took place on the 12th April as well as the base effect created by the collapse in output this time last year, the BDO Output Index increased 47.57 compared to last month.

Download April 2021 report

The chart below shows a sample of recent data from the Business Trends report. Any scores below 95 represent a contraction or a negative growth rate.

What is Business Trends?

The Business Trends report is one of the key monthly indicators of the performance of the UK economy, and provides an accurate and up-to-date picture of the environment that businesses are facing.

Business Trends covers more than 4,000 respondents from companies employing approximately five million employees across the UK. The report includes separate indices for services and manufacturing sector optimism and output, as well as indicators for UK inflation and employment.

Since 1992, the BDO Business Trends report has provided the most representative monthly measure of business output and optimism available. The results can be used as indicators of turning points in the economy as well as, because of their method of construction, leading indicators of the rates of inflation and growth.

See a sample Business Trends report

How is Business Trends prepared?

Indices are prepared on behalf of BDO LLP by the Centre for Economics and Business Research (CEBR), a leading independent economics consultancy.

Survey's contributing to Business Trends

Four indices covering output, optimism, inflation and employment, are calculated by taking a weighted average of the results of the UK's main business surveys, including:       

  • CBI Industrial Trends Survey
  • CBI Monthly Trends Enquiry
  • Bank of England Agents' summary of business conditions
  • Markit/CIPS Manufacturing and Services PMI data    

Taken together, these surveys cover more than 4,000 different respondents from companies employing approximately five million people in the UK. Collectively, they comprise the most representative measure of economic indicators and business confidence available. The respondents cover a range of different industries and business functions to deliver a comprehensive picture of the general economic outlook.