Output fall but firms upbeat

UK business output fell in April, but optimism about the future touched a five-year high, says a new business trends report out today.

The Output Index from accountancy and business services advisors BDO fell to 99.97 in April from 100.05 in March, putting the indicator below the long-term growth trend of 100.

“A fall in both UK manufacturing and services output drove the decline,” BDO said. However, employment continued to rise last month Ukwide, and the report’s Optimism Index showed that businesses remained confident about their prospects.

The index, which shows how firms expect output to develop in the next three to six months, rose to 102.49 in April from 102.26 the previous month.

Martin Gill, lead partner of BDO LLP in Scotland, said: “The optimism of both the manufacturing and services sectors is encouraging for the health of the Scottish and UK economy in the face of underwhelming business output.

“Weathering a string of shocks to the economy, which include a slowing euro zone and continued geopolitical uncertainty, comes down to good management from business leaders.

“Expectations for a Bank of England interest rate rise this month now look increasingly remote, but well managed businesses will still be looking for ways to insulate themselves against further shocks.”

The report’s Employment Index, which tracks firms’ intentions to hire in the coming six months, climbed for the fifth consecutive month and reached a record high of 112.29. The Bank of England monetary policy committee makes its monthly decision on interest rates this Thursday, having lifted rates to 0.5 per cent in November.