Employment reaches three-month high as optimism rises

12 April 2021

  • Continued vaccine rollout and gradual lifting of lockdown restrictions drive surges in BDO’s optimism and employment indices
  • Inflation enters positive territory, pointing to a potential sting in the tail of the recovery

Green shoots of optimism in the UK economy following the successful vaccine rollout and ongoing government support for businesses have driven the jobs market to a three-month high, according to the latest Business Trends report from accountancy and business advisory firm BDO LLP.

Having risen for a second consecutive month, the BDO Employment Index reached 107.91 in March, above the long-term average level of 100. The extension of the Coronavirus Job Retention Scheme along with improved employment prospects following the success of the vaccine rollout helped to drive up the index, which combines forward-looking employment intentions as well as the proportion of part-time or temporary workers in the UK jobs market.

Despite the positive outlook, the index still sits well below the pre-lockdown figure of 112.86 experienced in February last year. This month’s figure also falls short of the numbers seen last summer, when the Employment Index hit 109.88 in July 2020 as the chancellor’s Eat Out to Help Out scheme provided a substantial boost for the services sector.

Illustrating the scale of the pandemic’s impact on employment, the 28.3 million payroll employees recorded in February 2021 was 693,000 lower than during the corresponding period last year.

Improved sentiment in the Employment Index is reflected in BDO’s Optimism Index, which jumped to a 13-month high of 98.31 in March. In addition to the vaccination programme and a gradual easing of lockdown restrictions, optimism has been fueled by the absence of Brexit-related uncertainty, as businesses adjust to Britain’s new relationship with the EU.

However, BDO’s Inflation Index suggests a potential sting in the tail of recovery. The index jumped from 94.65 in February to 98.03 in March, marking the first point in 12 months it has surpassed the 95-level that indicates positive year-on-year growth. While base effects were an important contributor to this movement, rising levels of demand and commodity prices as the economy reopens, as well as the eventual termination of VAT reductions for certain sectors, are set to drive up inflation in the coming months.

Commenting on the results, Kaley Crossthwaite, Partner at BDO LLP, said: “The latest figures show definite signs of economic recovery, but there is a long road ahead. The jobs market has benefitted not only from extended government support, but also the speed of the vaccine rollout. If infections continue to fall and vaccination coverage continues to rise, the UK is on track to lift the bulk of domestic COVID-19 restrictions by the time the furlough scheme is withdrawn, which should soften the previously feared spike in unemployment.

“However, the financial toll of the crisis coupled with the lingering effects of the pandemic on global demand will cause pain in the months ahead, and rising inflation could be a further sting in the tail for the recovery.”

- ENDS -

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.


March 2021

(Figures for this report)

February 2021

January 2021 

March 2020

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 18 offices across the UK, employing 6,000 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 91,000 people working out of 1,658 offices worldwide. It has revenues of $10.3bn. 

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.