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Manufacturing confidence rallies as services sector stalls

09 October 2016

Signs of role reversal emerge in UK’s two-speed economy.

Four months after the Brexit vote, the UK’s two-speed economy appears to be undergoing a role reversal. Manufacturers are feeling more bullish about their economic outlook, while the short-term confidence of the services sector has been dented by lingering uncertainty, according to the latest Business Trends Report by accountants and business advisers BDO LLP.

Manufacturing has received a much-needed boost on the back of the vote to leave the EU. After a difficult two years for the sector, the weakness of sterling has made UK manufacturing much more competitive in overseas markets, giving an immediate boost to exports and order books. 

The BDO Output Index for manufacturing – which reflects companies’ current experience of orders - has increased to 95.1 from 93.9, putting it firmly back above the 95.0 level which indicates expansion. Similarly the sector’s Optimism Index – which reflects how companies expect their order books to develop in six months - is at its highest in over a year at 91.3.

This and the cheaper pound are both significant contributors to the sector’s growth in confidence this month.

Conversely, the BDO Output Index for the services sector has dipped below its three-year low to 97.3. This downward trend started ahead of the referendum but has become more pronounced since the vote. Despite this, service sector managers are very positive about the future, with their Optimism Index registering 101.1 this month.

Commenting on the findings, Peter Hemington, Partner, BDO LLP, said: 

“British businesses seem to be adopting an optimistic and pragmatic mindset post the Brexit referendum. The signs suggest that the business community has accepted the decision of the people and is determined to navigate the uncertain times ahead successfully.

Immediate investment in infrastructure should provide some additional stimulus to the bottom line of UK businesses – though the Chancellor needs to deliver a substantial programme in the Autumn Statement next month. And the government also needs to do more to bolster optimism by announcing as much as it can around a trade-friendly Brexit plan, so that businesses can best prepare for the opportunities and challenges of life outside the EU.”


Overview of the BDO indices:

An overview of all four indices is provided in the table below, detailing figures for the last three months and the same month of the previous year, to allow for comparison.


September 2016

(figures for this report)





September 2015

(equivalent report last year)

BDO Optimism Index





BDO Output Index





BDO Inflation Index





BDO Employment Index





Notes to editors

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world. 

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high growth businesses that fuel the economy. 

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed. 


BDO LLP operates in 18 offices across the UK, employing 3,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP has revenues of £405m and is the UK member firm of the BDO International network.

BDO International

The BDO International network provides business advisory services in 154 countries, with 64,500 people working out of 1,400 offices worldwide. It has revenues of $7.3bn.  


Alisa Charkova at Teneo Blue Rubicon on behalf of BDO LLP
Tel: 0207 260 2700
Email: [email protected]