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Confidence strengthens but risks remain

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Business confidence has reached its highest point for a year suggesting business conditions will continue to improve for the rest of 2013 although risks still remain to the economic outlook, according to a business trends report from BDO in the East of England.

BDO’s optimism index, which predicts business performance two quarters ahead, moved up for the fourth month running to 93.6 in May from 93.0 in April. Meanwhile an output index, which predicts short-run turnover expectations, rose to an 11-month high of 94.4 in May. A manufacturing index rose significantly from 90.8 to 93.7.

An employment index, which measures recruitment hopes for the next two quarters, rose to 96.6 in May, the index’s highest since August 2011 and above the 95 level which indicates employment growth. However inflationary expectations rose again in May, with an inflation index climbed to 104.2 from 103.4.

However both the optimism and output indices remain below the 95.0 mark that indicates growth, suggesting the economy still faces risks.

Marilyn Martin, partner and head of BDO LLP in the East of England, said: “It’s encouraging to see that business confidence has continued its upward trend, and that businesses have retained their healthy hiring intentions for a fifth consecutive month.

“However the Government must do more to achieve the robust economic growth that remains tantalisingly out of reach. The Government must look to ensure more funds are reaching businesses through lending, in order to help them drive our economic recovery.”

Last Updated ( Thursday, 11 July 2013 07:02 )