UK business output growth falls for first time in 2019
UK business output growth has declined for the first time this year.
BDO’s Output Index, which measures UK business output growth, fell to 98.63 in April from 98.74 in March.
Business confidence also registered another decline in April, slipping by 0.36 points to 95.74 – the lowest level the index has been since 2012.
As the imminent threat of a no-deal Brexit was lifted last month, activity in the manufacturing sector is expected to diminish due to unprecedented levels of stockpiling tailing off.
BDO’s Manufacturing Output Index, which tracks output growth in the sector, declined to 97.27 in April. This marks a year-on-year decrease of 8.32 points and compares to its most recent high of 103.26 in September 2018.
In further gloomy news for the manufacturing industry, confidence has hit a 30-month low.
BDO’s Manufacturing Optimism Index, which shows how businesses expect output to develop in the next three to six months, declined to 101.09 in April from 103.73 in March. The index has not been this low since November 2016 and reflects concerns by manufacturers that they expect growth to moderate in the coming months.
Optimism in the UK’s services sector fell for a ninth consecutive month after it plummeted by 4.15 points in March. The index shows that optimism dropped to 95.06, just 0.06 points off negative territory. Despite the extension of Article 50 until October, businesses still don’t have the clarity they desperately need on the future long-term relationship the UK will have with the EU.
Peter Hemington, partner at BDO, said: “The only certainty businesses have at the moment is that the UK government still doesn’t know exactly how or when the UK will leave the European Union. We are seeing the impact of this confusion, with business confidence plummeting.
“An extension of Article 50 alone is insufficient to restore sentiment among businesses. In the coming months, the government should look at further policy interventions, such as increasing the Annual Investment Allowance, to help businesses invest and stimulate the UK economy.”