Manufacturing output starts its long climb back to health as UK begins to emerge from coronavirus lockdown

08 June 2020

  • May’s increase in manufacturing output represents a welcome boost, but index lingers at historically low levels
  • Modest increase in confidence suggests beginning of long-term recovery

Manufacturing output across the UK increased significantly in May from its record low level as manufacturers started to emerge from the coronavirus lockdown, according to figures from the latest BDO Business Trends report.

BDO’s Manufacturing Output Index, which provides the most comprehensive snapshot of business output by weighting macroeconomic data from the UK’s main business surveys, jumped by 16.58 points to 69.55 in May, regaining around half of the losses sustained between March and April as manufacturers benefited from the easing of UK lockdown measures.

Despite this jump, the index remains at historically low levels and well short of the 95 level which indicates positive growth overall. BDO’s Services Output Index saw a more modest increase, rising by 9.65 points to 53.53 points in May.

BDO’s forward-looking Optimism Index suggests businesses anticipate a long and difficult path to recovery. The overall index increased by just 1.94 points in May, driven by an increase of 4.32 in the Manufacturing Optimism Index. The figures show the scale of the challenge facing businesses even as they emerge from the worst of the crisis, as they grapple with social distancing restrictions and attention begins to re-focus on Brexit negotiations and international trade relationships.

This difficult path to recovery is also reflected in BDO’s Employment Index. The index sank a further 6.96 points to 89.22 in May, leaving it at a record low. The weak scores across all indices of BDO’s Business Trends report highlight the intensely challenging economic circumstances that the UK finds itself in, and suggests that the Employment Index will not recover for some time.

Commenting on the results, Kaley Crossthwaite, Partner at BDO LLP, said: “While the jump in manufacturing output offers a glimmer of hope, early signs point to this being a long road to recovery. The UK is experiencing the deepest economic contraction in living memory, and possibly in its history.

“Output remains drastically below where it would be in ordinary times, but the latest readings suggest we have passed the rock bottom of this crisis. I’m optimistic for further gains in the Output Index in June if the government proceeds with plans to gradually open up the economy.

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.


May 2020

(Figures for this report)

April 2020



May 2019

BDO Output Index





BDO Optimism Index





BDO Inflation Index





BDO Employment Index





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.

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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.