Manufacturing output starts its long climb back to health as UK begins to emerge from coronavirus lockdown
- May’s increase in manufacturing output represents a welcome boost, but index lingers at historically low levels
- Modest increase in confidence suggests beginning of long-term recovery
Manufacturing output across the UK increased significantly in May from its record low level as manufacturers started to emerge from the coronavirus lockdown, according to figures from the latest BDO Business Trends report.
BDO’s Manufacturing Output Index, which provides the most comprehensive snapshot of business output by weighting macroeconomic data from the UK’s main business surveys, jumped by 16.58 points to 69.55 in May, regaining around half of the losses sustained between March and April as manufacturers benefited from the easing of UK lockdown measures.
Despite this jump, the index remains at historically low levels and well short of the 95 level which indicates positive growth overall. BDO’s Services Output Index saw a more modest increase, rising by 9.65 points to 53.53 points in May.
BDO’s forward-looking Optimism Index suggests businesses anticipate a long and difficult path to recovery. The overall index increased by just 1.94 points in May, driven by an increase of 4.32 in the Manufacturing Optimism Index.
Download May 2020 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.