BDO Output Index hits a 16-month high as businesses frontload amid disruption concerns
BDO Output Index hits a 16-month high as businesses frontload amid disruption concerns
- BDO’s Output Index hits highest level in more than a year amid concerns of long-term disruption
- Business Optimism Index improved modestly in April but remains in negative territory
- Employment Index falls to a fresh 15-year low with businesses cautious on hiring
UK business activity strengthened in April as businesses likely frontloaded amidst concerns of longstanding disruption, according to the latest Business Trends report from accountancy and advisory firm BDO LLP, but inflationary pressures and ongoing conflict in the Middle East continue to weigh on their outlook and hiring.
BDO’s Output Index, a reflection of economic activity in the UK, rose to 99.64 in April, up from 96.74 in March to its highest reading in over a year. Both manufacturing and services contributed to the increase, with new orders supported by stronger domestic and foreign demand.
However, the report suggests some of the recent uplift may reflect businesses frontloading ahead of anticipated volatility later in the year. Expected GDP growth is just 0.9% across 2026 according to the Bank of England, well below its long-term trend, and the research suggests April’s uplift in output may not be sustained long-term.
Business confidence also improved modestly in April, with the Optimism Index rising to 92.37 and remaining in similar territory to readings seen during other recent geopolitical shocks, such as the Liberation Day tariffs. This bounce was supported by both manufacturing and services and was likely a response to the short-term relief offered by the US-Iran ceasefire. Nonetheless, the Index remains in contractionary territory, having stagnated at levels below the 95-point threshold dividing expansion from contraction for the 18th consecutive month.
As cost pressures continued to build, BDO’s Inflation Index rose to 101.36, its highest reading since June 2023. The increase was driven primarily by a sharp rise in input costs, reflecting global price volatility and external supply pressures facing UK businesses.
Against this backdrop, companies remain caught in a low-fire, low-hire environment. Labour market conditions continued to weaken as the Employment Index (a culmination of hiring intentions, headcount and labour demand) fell to a fresh 15-year low of 93.08. The Employment Index has now remained in negative territory for 16 consecutive months.
Scott Knight, Head of Strategy at BDO, said: “April’s uptick is welcome but shouldn’t be mistaken for long-term recovery. With the levels of inflation and geopolitical upheaval we’re seeing, it’s no wonder businesses are hunkering down and stockpiling resources. Until cost pressures ease and global markets calm down, meaningful growth is unlikely.
ENDS
Overview of the BDO indices
An overview of all four indices is provided in the table below, detailing figures for the last four months to allow for comparison. 100 = average value. Above 95 = positive.
BDO’s Business Trends 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.
April 2026 (figures in this report) |
March 2026 |
February 2026 |
January 2026 |
December 2025 |
|
| BDO Optimism Index | 92.37 | 91.83 | 93.45 | 90.04 | 90.01 |
| BDO Output Index | 99.64 | 96.74 | 97.45 | 97.11 | 96.66 |
| BDO Inflation Index | 101.36 | 99.30 | 98.51 | 99.73 | 98.80 |
| BDO Employment Index | 93.08 | 93.28 | 93.30 | 93.30 | 93.32 |
Note to editors
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