Business output and confidence in decline for the first time since April

09 November 2020

Falls seen across the services and manufacturing sectors 
Economic impact of regional restrictions points to a painful second lockdown 
Furlough scheme extension will insulate the jobs market from a major hit in the short term 

Both business output and confidence fell in October for the first time since the initial lockdown in April. The BDO Output Index fell by 0.86 points in October, putting an end to five consecutive months of recovery.

The latest figures show that regional lockdowns and a tightening of national restrictions had already started to take their toll on business output across the UK - and point to an even more difficult month ahead as the second nationwide lockdown commences. Overall, BDO’s Output Index now stands at 77.09, well below the 95 level that indicates annual output growth.

Commenting on the results, Kaley Crossthwaite, Partner at BDO LLP, said: “The green shoots of recovery which started to emerge in May have been dealt a blow by the announcement of a second lockdown. While the extension of the furlough scheme until March is welcome news for employees in the immediate term, uncertainty looms over sustainable job security and fears of mass redundancies have merely been pushed back rather than solved.

“That said, with many businesses now adapted to life under lockdown, the second dip isn’t expected to be as deep as the first shock.”

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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. 100 = average value. Above 95 = positive.

  October 2020 (Figures for this report) September 2020 August 2020 October 2019
BDO Output Index 77.09 77.95 76.94 96.69
BDO Optimism Index 88.94 89.31 86.44 95.59
BDO Inflation Index 94.19 94.46 94.06 94.25
BDO Employment Index 109.49 109.46 109.69 111.82

Note 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 17 locations across the UK, employing nearly 5,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

The BDO global network provides business advisory services in 167 countries, with 88,000 people working out of 1,800 offices worldwide. It has revenues of $9.6bn. 

Methodological notes

The BDO Monthly Business Trends Indices are prepared on behalf of BDO LLP by the Centre for Economics and Business Research ltd., a leading independent economics consultancy. Cebr has particular strengths in all forms of macroeconomic and market forecasting for the UK and European economies and in the use of business survey techniques.

The indices are calculated by taking a weighted average of the results of the UK’s main business surveys. It incorporates the results of the quarterly CBI Industrial Trends Survey (and the CBI Monthly Trends Enquiry which is carried out in the intervening months); the Bank of England Agents’ summary of business conditions; and the Markit/CIPS Manufacturing and Services PMI data

Taken together the surveys cover over 4,000 different respondents from companies employing approximately five million employees. The respondents cover a range of different industries and a range of different business functions. Together they make up the most representative measure of business trends available.

The surveys are weighted together by a three-stage process. First, the results of each individual survey are correlated against the relevant economic cycles for manufacturing and services. This determines the extent of the correlations between each set of survey results and the relevant timing relationships. Then the surveys are weighted together based on their scaling, on the extent of these correlations and the timing of their relationships with the relevant reference cycles.

Finally, the weighted total is scaled into an index with 100 as the mean, the average of the past two cyclical peaks as 110 and the average of the past two cyclical troughs as 90.

The results can not only be used as indicators of turning points in the economy but also, because of their method of construction, be seen as leading indicators of the rates of inflation and growth.