Service sector confidence soared to its highest level in more than a year last month as the UK’s continued vaccine rollout and the easing of lockdown restrictions boosted optimism.
Confidence among businesses in the service sector hit a 14-month high in April after rising 1.36 points to 99.86, according to BDO’s latest services optimism index.
This contributed to a rise in the overall optimism index for the third consecutive month from 98.31 to 99.85, just below the long-term average level of 100.
The rise in optimism, which came as outdoor hospitality, gyms and non-essential retail reopened last month, suggests businesses are confident that the easing of lockdown measures will continue as planned.
Prime Minister Boris Johnson is today expected to confirm that the next stage of the roadmap will take place as planned on 17 May, allowing indoor hospitality to resume.
It also reflects the continued success of the UK’s vaccine rollout, with two-thirds of the adult population now having received their first dose of the jab.
Businesses in other sectors also recorded improved optimism, with the index for manufacturing rising 2.97 points to reach 99.79 in April.
This reflected increased demand as lockdown measures were eased, as well as the super-deduction tax announced by chancellor Rishi Sunak in the Budget in March.
The output index also rose, while recent data has shown a significant month-on-month increase in spending on credit and debit cards and the number of online job adverts in the catering and hospitality sectors has soared since the start of April.
“The latest figures show that most businesses anticipate the country will continue unlocking as planned. The government’s comments in recent weeks reflected this sentiment, which will have fueled the rise in optimism as most businesses return to relative normality,” said Kaley Crossthwaite, partner at BDO.
“It’s important to remember that we are still recovering from an incredibly low base. At this time last year we were at the height of the first lockdown with the vast majority of businesses closed. Lingering concern around the impact of Brexit on supply chains means that our recovery might not be as quick as it might have otherwise been, but overall this is much needed positive news for businesses across all the regions and nations of the UK.”