BDO expects ‘rapid growth’ as confidence surges
BUSINESS confidence reached its highest level for 22 years last month, according to a survey from accountants BDO.
The firm’s Business Trends report for January record a pick-up in sentiment in the services and manufacturing sectors, suggesting increased economic growth in the months ahead.
The BDO Optimism Index, which predicts business performance two quarters ahead, reached 103.8 in January, up from 103.4 in December. This is the highest reading ever recorded since readings began 22 years ago and sits well above the 100.0 mark, meaning the economy is expected to outperform its long-term historical growth trend, the firm said.
In the manufacturing sector, the optimism rose to an all-time high of 117.1 in January, up from 115.5 in December. And in services, which accounts for roughly three quarters of the economy, confidence rose to 101.2 in January, up from 100.7 on the previous month.
Recruitment expectations increased in January too, signalling that job creation is likely to exceed trend growth over the coming months. BDO said there was little evidence of business cost inflation, which helps companies – especially manufacturers – control costs.
Tim Entwistle, partner and head of BDO in the North West, said: “Business confidence has hit record highs as we enter 2014 and we expect the economy to grow rapidly in the first half of the year.
“Companies are raising headcounts in response to rising client demand and the data suggests that the unemployment rate is likely to fall below the Bank of England’s 7% threshold for considering raising interest rates in the very near future.”
