Business confidence points to slow recovery as oil prices rise

Tim Wallace
Follow Tim
RISING output forecasts from firms point to an increase in GDP in this quarter, according to an influential survey published today.

The BDO output index, which points to business conditions one quarter ahead, rose above the 95 mark which indicates growth for the first time since the summer of 2011 – but longer-term prospects have been hit by oil price rises.

The index jumped from 93.5 in February to 95.7 in March – its highest level in nine months, suggesting short-term growth prospects are improving.

However, looking further forward, growth towards the end of the year is set to remain muted.

The BDO optimism index, which looks two quarters ahead, dropped back from 98 in February to 96.7 in March – still above the 95 growth level, but firmly below the 100 mark that indicates trend growth.

A return of the Eurozone crisis and rising oil prices have hit the manufacturing sector’s outlook particularly hard, with its indicator moving from 96.9 back into a contractionary 94.6 in March.

“It is encouraging to see positive signs in the short term, but it is two steps forward followed by one step back at the moment, as the overall recovery is likely to be a slow one.,” said BDO’s Peter Hemington.