Business output falls to four-year low
UK business output has fallen to a four-year low, according to the latest Business Trends Report by accountants and business advisers BDO.
The report reveals that BDO’s output index – which indicates how businesses expect their order books to develop over the next three months – fell to 95.6 in April from 95.9 in March, the lowest level in four years. It is now well below the long-term growth trend of 100 and is only just above the point of contraction, below 95.0.
The slowing services sector, which makes up the majority of the UK economy, is primarily responsible for the gloomy output figures. BDO’s output index for the services sector has fallen to 95.3 from 95.7 the previous month.
The manufacturing output index fell marginally from 97.2 to 97.1 in April but is well above the 2016 average of 95.2.
Despite slow growth in output, UK businesses continue to be optimistic about the future. BDO’s optimism index - which indicates how firms expect their order books to develop in the coming six months – has risen to 102.5 from 102.2 in March.
Richard Rose, Midlands tax partner at BDO, said: “There appears to be growing disconnect between what businesses are experiencing now and how they expect their order books to develop in the coming six months. Current output levels are very close to a zero-growth level, yet UK business people are strongly optimistic. This would suggest that we could be in line for a significant growth surge in early 2018."
