Business Trends

12 July 2021

Business confidence soars to highest level since 2005

  • BDO Optimism Index reaches its highest level since 2005 driven by lifting of restrictions from 19 July
  • BDO Employment Index reaches 6 month
  • Inflation Index edges towards a four-year high driven by supply chain disruption and increased demand for goods and services

Business confidence jumped in June to its highest point since 2005, as businesses look ahead to the lifting of lockdown restrictions later in July. The BDO Optimism Index moved 2.74 points from 109.71 in May to 112.45 in June, marking the fifth consecutive month of growth. The index now stands well above the average level of 100.

The rise was driven by the Manufacturing Optimism Index, which rose from 102.98 to 113.22 in June. The rise in the Services Optimism Index was more muted this month, increasing by 1.79 points to 112.35. As the index includes the wider hospitality industry, the response reflects that little has changed for these businesses over the past month in terms of lockdown restrictions.

The BDO Employment Index also increased for the second consecutive month in June, reaching a six-month high of 108.01. As with the BDO Optimism Index, the increase was largely driven by the recent gradual reopening of the economy and the anticipation of further lifting of restrictions.

The BDO Inflation Index reached a four-year high of 103.83 in June, up from 102.51 in May. Disruptions to global supply chains caused by factors such as Brexit and the blocking of the Suez Canal, combined with increased demand from households looking to spend savings accumulated during lockdown and higher wages due to labour shortages, have driven prices higher.

Commenting on the results, Kaley Crossthwaite, Partner at BDO LLP, said: “Businesses are clearly looking forward to the lifting of restrictions on 19 July. After a grueling year of unpredictable change, the ending of restrictions is timely, although rising COVID-19 cases still leave an element of uncertainty. The Summer spending surge that could follow will provide a huge boost to the economy, and businesses will be hopeful that the tide is turning over the long term.” 

Download June 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.