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Business output continues its resurgence, but rate of recovery begins to slow

10 August 2020

- Impact of coronavirus on the UK manufacturing sector drags down overall increase in business output - 

- Employment Index falls for a fifth consecutive month, but worse could be yet to come -


Business output across the UK increased for a third consecutive month in July as the services sector benefited from the continued lifting of lockdown restrictions, but the pace of recovery has started to wane.

BDO’s Output Index, which provides the most comprehensive snapshot of output in the manufacturing and services sectors by weighting macroeconomic data from the UK’s main business surveys, rose by 6.70 points to 73.20 in July. This compares to a more significant rise of 11.16 points in June, suggesting the rate of economic recovery is beginning to slow. The Index also remains considerably short of the 95-point level which represents an annual expansion in output.

BDO’s Services Output Index - which encompasses a range of industries including retail, hospitality, and transport - rose by 6.81 points to 71.54 points in July. This followed new government guidance at the start of the month allowing pubs, restaurants, and cafes to reopen, leading consumers back to the high street.

Meanwhile, BDO’s Manufacturing Output Index recorded a more muted rise of 5.81 points in July, a marked downturn in the rate of recovery, which increased at almost twice the pace (10.92 points) in June. The manufacturing sector’s reliance on international exports means it has been adversely affected by the rising numbers of coronavirus cases seen across the world.

Elsewhere in the report, the BDO Employment Index fell for the fifth consecutive month, sliding 0.66 points to its lowest level since November 2016. However, this relatively steady and small rate of decline suggests that government support has been broadly successful in retaining jobs so far.

Commenting on the results, Kaley Crossthwaite, Partner at BDO LLP, said: “The latest data suggests we might be approaching a plateau in our economic recovery. While the reopening of the hospitality sector has provided a much-needed uplift, the ongoing capacity restraints caused by social distancing, as well as pressures on UK manufacturers imposed by weakened overseas demand, means this growth is likely to continue to slow.  

“Support from the Coronavirus Job Retention Scheme has successfully insulated millions of workers from the worst impact of the economic downturn. But with this government support beginning to taper, it remains to be seen how resilient the jobs market can continue to be.”

To download BDO’s Business Trends New Economy report and find out more, visit or our Business Trends page.


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.

  Jul-20                (Figures for this report) Jun-20 May-20 Jul-19
BDO Output Index 73.2 66.5 55.34 96.99
BDO Optimism Index 80.9 79.59 75.02 99.47
BDO Inflation Index 90.87 88.06 87.65 98.04
BDO Employment Index 107.37 108.03 108.11 112.76

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.