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Business output shows signs of recovery as economy opens up

13 July 2020

  • Significant jump in output comes as economy continues to re-open, but Index remains at historic lows
  • Fourth consecutive month of decline for Employment Index suggests challenging long-term outlook

Business output across UK services and manufacturing increased significantly in June as both sectors benefited from the continued lifting of lockdown restrictions, according to figures from the latest BDO Business Trends report.

BDO’s Services Output Index, which provides the most comprehensive snapshot of output in the services sector by weighting macroeconomic data from the UK’s main business surveys, rose by 11.20 points to 64.73 in June, its largest increase on record, as businesses felt the benefit of being allowed to reopen from 15 June.

The rise in services output - which encompasses a range of industries including retail, hospitality, transport and professional services - mirrors the jump seen in May’s Manufacturing Index when many employers in the sector were given the green light to re-start work. Output across the manufacturing industry continued this upward trajectory in June, with the Index increasing from 69.55 to 80.47.

Overall, BDO’s Output Index rose by 11.16 points to 66.50 in June, still well short of the 95 level that represents positive growth, and significantly below the lowest point of the 2008/2009 financial crisis, which hit a low of 79.28 in April 2009.

BDO’s Employment Index also continued its downward trend throughout June, dropping 1.87 points and taking the Index to its lowest level since January 2016. This fall represents the fourth consecutive month of decline, a trend likely to continue as Government support is rolled back further.

A similarly gloomy picture emerges from BDO’s forward-looking Optimism Index, which at 79.59 remains below its lowest point of 79.64 during the 2008/09 credit crunch, despite a second consecutive month of improvement.

Commenting on the results, Kaley Crossthwaite, Partner at BDO LLP, said: “Although economic activity remains considerably suppressed, the recovery in output is an encouraging signal that the easing of restrictions has breathed life into certain sectors.

“While output continues to show positive momentum, the crucial infrastructure underpinning the economy remains fragile. As government support measures are rolled back in the coming months, the prospects for the economy will become clearer. For now at least, there is reason for some very cautious optimism.”

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


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.

  June 2020
(Figures for this report
May 2020 April 2020 June 2019
BDO Output Index 66.5 55.34 44.9 97.24
BDO Optimism Index 79.59 75.02 73.08 99.23
BDO Inflation Index 88.06 87.65 92.13 99.25
BDO Employment Index 106.24 108.11 109.61 112.82

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.