Business confidence hits a 20-year low

Despite the little lifts in manufacturing and services, British businesses are still feeling gloomy. BDO's Optimism Index fell to 89.1 in August from 93.1 in July.

by Rebecca Burn-Callander
Last Updated: 09 Oct 2013

The Optimism Index is a barometer of business confidence, measuring how British businesses believe they will fare in two quarters time. This time around, the answer is: 'not great'. In fact, UK plc has being trotting out the 'not great' line for a while now: this is the sixth consecutive month that the Index has shown a drop.

BDO's Output Index – which predicts short-run turnover expectations – is also on a downward trajectory, falling from to 90.8 in August from 93.9 in July, its lowest point for 40 months. Peter Hemington, partner at BDO, commented on the data: 'The sluggish economic environment continues to elicit zig-zagging business sentiment,' he said, 'with confidence now at its lowest level since Business Trends began nearly 20 years ago.'

But, echoing the volatility of recent economic data, there is some contradictory cheer from the Lloyds TSB Regional Purchasing Managers' Index. This measures output across the English regions and its latest results show an increase to 52.7 in August, up from 49.5 in July, the fastest pace of growth for five months.

No wonder MT's economic crystal ball remains cloudy...

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