Service sector confidence soars as vaccine roll-out continues

10 May 2021

  • Continued vaccine rollout and lifting of lockdown restrictions drives surge in BDO’s Optimism Index to 14 month high
  • Services sector confidence improved following reopening of outdoor hospitality, gyms and non-essential retail in April
  • Output in manufacturing also grows, but Brexit concerns still have an impact

The continued success of the UK’s vaccination rollout programme combined with the easing of lockdown restrictions led to a 14-month high in services sector confidence in April, according to the latest monthly Business Trends report from accountancy and business advisory firm BDO LLP.

BDO’s Services Optimism Index rose by 1.36 points in April from 98.50 to 99.86, driven by the lifting of restrictions on indoor entertainment venues including restaurants, cinemas, children’s play areas and the rest of the accommodation sector including hotels and hostels. This contributed to a rise in the overall BDO Optimism Indexfor the third consecutive month from 98.31 to 99.85, just below the long-term average level of 100. The increase in optimism suggests there is confidence that the country’s roadmap out of lockdown will go ahead  as planned.

This optimism wasn’t just confined to the services sector. BDO’s Manufacturing Optimism Index rose by 2.97 points to reach 99.79 in April, again driven by increased demand as the country continues to ease out of lockdown. The Chancellor’s super-deduction tax announced in March also supported manufacturing firms, providing access to finance to bring forward investment plans into the qualifying period. This is despite some caution remaining around the continued impact on supply chains caused by Brexit. The positive improvement in both the Manufacturing and Services indices reflects businesses’ renewed confidence in the Government sticking to the roadmap for lockdown easing.

Elsewhere in the report, the BDO Output Index continued to improve with large gains in the Services Output Index and the Manufacturing Output Index. Driven by a combination of the easing of restrictions that took place on the 12th April as well as the base effect created by the collapse in output this time last year, the BDO Output Index increased 47.57 compared to last month. Recent data has also shown that aggregative spending on credit/debit cards significantly increased month on month, while the number of online job adverts in the catering & hospitality sector has soared since the start of April.

Commenting on the results, Kaley Crossthwaite, Partner at BDO LLP, said: “The latest figures show that most businesses anticipate the country will continue unlocking as planned. The Government’s comments in recent weeks reflected this sentiment, which will have fueled the rise in optimism as most businesses return to relative normality.  

“It’s important to remember that we are still recovering from an incredibly low base. At this time last year we were at the height of the first lockdown with the vast majority of businesses closed. Lingering concern around the impact of Brexit on supply chains means that our recovery might not be as quick as it might have otherwise been, but overall this is much needed positive news for businesses across all the regions and nations of the UK.”

- 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.



April 2021

(Figures for this report)

March 2021


February 2021


March 2020

BDO Output Index





BDO Optimism Index





BDO Inflation Index





BDO Employment Index





Note to editors 

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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.