The UK economy picked up in October, according to the latest Business Trends report from business advisory and accountancy firm BDO LLP.
BDO’s Output Index rose to 97.49 in October, up from 96.25 in September.
This marks its largest monthly improvement since December 2024, when the UK economy grew off the back of strong consumer-facing sectors, including leisure activities such as pubs and bars, likely boosted by last year’s festive period.
Both the services and manufacturing sectors contributed to October’s rise, with easing cost pressures such as lower-than-expected inflation, which in turn increased domestic demand driving improvement in services output.
The Manufacturing Output Index rose to 94.14 from 92.64 – its largest monthly improvement since April this year. The sector was helped by clarity from recent trade deals in the US and India, as well as the resumption of operations at Jaguar Land Rover following a cyber incident earlier this year.
While optimism among manufacturers remains higher than at the start of the year, expectations of subdued growth and continued policy uncertainty have tempered confidence across the board. The Services Optimism Index slipped marginally to 92.92 from 92.95 and the Manufacturing Optimism Index fell to 96.27 from 96.80, marking a four-month low.
The BDO Employment Index ended its five-month downward trend in October, edging up slightly to 93.95. While the index remains well below historic norms, this marks the first improvement since early 2025 and suggests tentative signs of stabilisation in the labour market for the months ahead.
Although employment dropped in September, and vacancies continued to fall through the third quarter, the pace of decline in both measures slowed compared to earlier in the year, hinting that labour market conditions may be levelling off. Even so, the unemployment rate rose to 4.8% in the three months to August – its highest level since mid-2021 – underlining the continued fragility of the jobs market as businesses wait for more certainty from their operating environment.
Scott Knight, Head of Growth at BDO LLP, said: “This month’s report shows businesses remain stuck in wait mode as nerves around the Autumn Budget weigh on confidence. After what feels like months of kite flying to test opinion and policies, the UK’s businesses need clarity before they can confidently invest in meaningful opportunities for growth. With the right signals from Government, businesses can confidently move forward – but for now the mood music remains subdued.”
