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Fibre2Fashion
4 days ago
- Business
- Fibre2Fashion
UK business optimism rises in July on manufacturing rebound
UK's optimism index rose to 91.96 in July, up from 91.58 in June, following nine consecutive months of subdued business sentiment since the Autumn Budget, according to BDO. This was driven by a strong rebound in manufacturing optimism, which rose sharply from 93.74 to 96.5. Recent trade agreements could be a driver of this uptick for manufacturing optimism. However, headwinds including weak GDP growth, high labour and energy costs and ongoing uncertainty surrounding future global trade policy continue to weigh on confidence, BDO said in its latest monthly Business Trends report. UK business optimism rose to 91.96 in July, led by a manufacturing rebound, BDO reported. New trade deals lifted sentiment, but weak GDP growth, high costs, and trade policy uncertainty weigh on confidence. Output remains muted, and employment hit a near 13-year low, with hiring constrained by rising costs. BDO sees fragile recovery and persistently low employment through 2025. BDO's output index also edged down to 97.79 in July from 98.05 in June, signalling sustained yet muted growth below historic levels. Although new trade deals are showing promise, this has yet to unlock meaningful investments for businesses. Margin pressures remain acute, and companies are still holding back amid uncertainty. Against this backdrop, the BDO Employment Index fell to 94.11 in July, matching its lowest reading since October 2012. This near 13-year low reflects a marked cooling in the labour market, with declining payrolled employee numbers and falling vacancy rates contributing to subdued hiring sentiment. While there are survey-based signs of modest improvement in near-term recruitment plans for manufacturers, the structural pressures remain acute across all sectors. Higher employer National Insurance Contributions and April's rise in the National Living Wage have tightened labour budgets, and businesses are preparing for further cost exposure ahead of the Autumn Statement, BDO said in a press release. With economic analysis behind the Business Trends report forecasting an unemployment rate peak at 4.9 per cent later this year, there is limited scope for a meaningful recovery in employment conditions. BDO expects the employment index to remain at historically low levels for the rest of 2025. 'There are signs of recovery, but they are fragile. Manufacturers may be breathing a little easier in the wake of trade deals, but their output is yet to catch up,' said Scott Knight, head of growth at BDO. 'Business leaders are stuck in limbo, waiting for clearer signals from the government that further investment will be worth the gamble.' Fibre2Fashion News Desk (SG)
Fibre2Fashion
09-07-2025
- Business
- Fibre2Fashion
UK employment stalls despite early signs of economic recovery: BDO
The UK's employment outlook remains stagnant, with labour market stuck near its lowest level in over a decade, even as the broader economy shows early signs of a summer recovery, according to BDO. The Employment Index fell again in June to 94.22 from 94.32 the previous month, nearly at a 13-year low. Despite some positive output signals from the services sector, hiring remains subdued as businesses continue to grapple with cost pressures, BDO said in its latest Business Trends report. BDO's June 2025 Business Trends report showed that UK's employment outlook remains stagnant, with the Employment Index near a 13-year low at 94.22. Despite a modest rise in output, business confidence and hiring remain subdued due to rising costs and NICs. Inflation pressures are easing slightly, but optimism is predicted to stay below average through 2025, as firms adopt a cautious stance. The report stated that the demand for labour is adjusting in response, with many firms holding back on recruitment. This caution is reflected in payrolled employment figures, which fell by 109,000 in May—nearly twice the drop seen in April—pointing to a possible acceleration in job losses. Business confidence continues to remain underwhelming, with BDO's Optimism Index falling to 91.58 from 92.3 in the previous month. Core cost pressures, particularly around labour, continue to drag on margins, with the prospect of further tax rises in the Autumn adding further to a cautious sentiment. Greater certainty following recent trade agreements with the US, EU and India offered a small boost to manufacturing business sentiment, but the sector remains volatile with no clear easing of these headwinds in sight. The report predicted optimism will stay well below long-term averages through the second half of the year. 'There are some positive signals in the UK economy, with the BDO Output Index rising from 97.16 in May to 97.51 at the end of June, marking two months of consecutive increase,' said report. The BDO inflation index decreased to 99.1, down from 99.59 the previous month. Meanwhile, the BDO Employment Index registered at 94.22, marginally down from May's 94.32. 'We're seeing early signs of recovery in business output, largely down to the services sector who have buoyed the economy for a second month in a row,' said Scott Knight, head of growth at BDO. 'But, as we all know, we can't rely on good weather forever. Businesses are treading carefully in wait-and-see mode when they need to be bold in their recruitment and investment. Without lower labour costs, clear signalling from government and a stable policy environment, growth will remain subdued.' The report is based on data drawn from multiple surveys, collectively covering responses from over 4,000 businesses across the UK. Fibre2Fashion News Desk (SG)
