Output rebounds but budget nerves hold back further growth
Output rebounds but budget nerves hold back further growth
- BDO's Output Index records strongest monthly rise of 2025 but momentum remains fragile
- Business confidence tempers as leaders await clarity from Autumn Budget
- Employment Index shows early signs of stabilising after months of decline
The UK economy picked up in October, according to the latest Business Trends report from business advisory and accountancy firm BDO LLP. BDO’s Output Index rose to 97.49 in October, up from 96.25 in September. This marks its largest monthly improvement since December 2024, when the UK economy grew off the back of strong consumer-facing sectors, including leisure activities such as pubs and bars, likely boosted by last year’s festive period.
Both the services and manufacturing sectors contributed to October’s rise, with easing cost pressures such as lower-than-expected inflation, which in turn increased domestic demand driving improvement in services output. The Manufacturing Output Index rose to 94.14 from 92.64 – its largest monthly improvement since April this year. The sector was helped by clarity from recent trade deals in the US and India, as well as the resumption of operations at Jaguar Land Rover following a cyber incident earlier this year.
While optimism among manufacturers remains higher than at the start of the year, expectations of subdued growth and continued policy uncertainty have tempered confidence across the board. The Services Optimism Index slipped marginally to 92.92 from 92.95 and the Manufacturing Optimism Index fell to 96.27 from 96.80, marking a four-month low.
Tentative stabilisation for Employment as index improves from 13-year low
The BDO Employment Index ended its five-month downward trend in October, edging up slightly to 93.95. While the index remains well below historic norms, this marks the first improvement since early 2025 and suggests tentative signs of stabilisation in the labour market for the months ahead.
Although employment dropped in September, and vacancies continued to fall through the third quarter, the pace of decline in both measures slowed compared to earlier in the year, hinting that labour market conditions may be levelling off. Even so, the unemployment rate rose to 4.8% in the three months to August – its highest level since mid-2021 – underlining the continued fragility of the jobs market as businesses wait for more certainty from their operating environment.
Scott Knight, Head of Growth at BDO LLP, said: “This month’s report shows businesses remain stuck in wait mode as nerves around the Autumn Budget weigh on confidence. After what feels like months of kite flying to test opinion and policies, the UK’s businesses need clarity before they can confidently invest in meaningful opportunities for growth. With the right signals from Government, businesses can confidently move forward – but for now the mood music remains subdued."
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.
BDO's Business Trends is comprises multiple surveys covering 4,000 respondents. Further information on inputs and the data included is available on request, but please note the ONS Labour Force Survey is not one of them.
|
|
October 2025 (Figures for this report) |
September 2025 |
August 2025 |
July 2025 |
June 2025 |
May 2025 |
|
BDO Optimism Index |
93.30 |
93.38 |
93.18 |
91.96 |
91.58 |
92.30 |
|
BDO Output Index |
97.49 |
96.25 |
97.95 |
98.28 |
98.64 |
97.40 |
|
BDO Inflation Index |
99.28 |
101.02 |
100.57 |
99.72 |
99.10 |
99.59 |
|
BDO Employment Index |
93.95 |
93.90 |
94.01 |
94.11 |
94.22 |
94.32 |
Note to editors
BDO LLP operates in 18 offices across the UK, employing 8,000 people. It has UK revenues of £1bn.
It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing services predominantly to mid-sized, entrepreneurially-spirited, high-growth businesses that are driving growth in the UK economy. BDO calls this segment of the market the UK’s economic engine.
BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 119,000 people working out of 1,800 offices worldwide. It has revenues of US$15bn.
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