Business Trends

12 April 2021

Employment reaches three-month high as optimism rises

  • Continued vaccine rollout and gradual lifting of lockdown restrictions drive surges in BDO’s optimism and employment indices
  • Inflation enters positive territory, pointing to a potential sting in the tail of the recovery

The successful vaccine rollout and ongoing government support for businesses have driven the jobs market to a three-month high, according to our latest Business Trends report.

The BDO Employment Index reached 107.91 in March, above the long-term average level of 100. The extension of the Coronavirus Job Retention Scheme and the success of the vaccine rollout helped to drive up the index, which combines forward-looking employment intentions as well as the proportion of part-time or temporary workers in the UK jobs market.

Nonetheless, the index still sits well below the pre-lockdown figure of 112.86 and July 2020’s score of 109.88 when the “Eat Out to Help Out” scheme provided a substantial boost for the services sector. The pandemic’s impact on employment is made clear by the 28.3 million payroll employees recorded in February 2021, almost 700,000 lower than February 2020.

Improved sentiment in the Employment Index has driven up BDO’s Optimism Index, which reaching a 13-month high of 98.31 in March. The vaccination programme and a gradual easing of lockdown  have all contributed as has the the absence of Brexit-related uncertainty with businesses adjusting to Britain’s new relationship with the EU.

BDO’s Inflation Index suggests a potential sting in the tail of recovery with the index passing the 95-level that indicates positive year-on-year growth to reach 98.03 in March.

Download March 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.