Business confidence has fallen to a seven-year low amid declining optimism in the services and manufacturing sectors, research suggests.
An optimism index by BDO, the accounting firm, fell by 0.67 points last month to 95.59, its weakest since March 2012 and close to the 95 level that signals zero growth.
The report is compiled for BDO by the Centre for Economics and Business Research, a consultancy, by weighting economic data from Britain’s main business surveys, covering more than 4,000 different respondents from companies employing five million people. They include the quarterly CBI industrial trends survey, the Bank of England’s agents’ summary of business conditions and the Markit/CIPS manufacturing and services purchasing managers’ index.
The decline was because of a drop in manufacturing optimism, which fell by 3.38 points in October, and to a lesser extent by the key services sector, which fell by 0.34 points.
Businesses are contending with uncertainty over Britain’s relationship with the European Union, the trade war between America and China and signs of a slowing global economy.
Peter Hemington, a partner at BDO, said that the last time business confidence was so low “was when the country was staggering out of the doldrums caused by the global financial crisis . . . With an unpredictable general election looming, continued political volatility in the UK remains a key driver of falling optimism.”
BDO also produces monthly output and inflation indices. Manufacturing output fell for a 13th consecutive month to 87.1 points, down by 0.9 from September and “well into recessionary territory”. It left the overall business output index at 96.69, down by 0.75 points. The inflation index fell by 1.11 points to 94.25 in October, its lowest level since May 2016, the month before the EU referendum.