UK consumer confidence hits seven-month high as COVID fears wane

UK consumer confidence hit a seven-month high in January amid improvement in manufacturing output and easing of supply chain challenges.

According to the latest business trends report from accountancy firm BDO, the index jumped by 7.84 points to 11.752 following an increase in consumer activity.

As well as easing supply chain pressures, fewer concerns around the Omicron variant also helped to boost business outlook.

The figures for January mark a turnaround from December, when concerns over the new COVID strain helped drag the output index down by 3.31 points.

The data also showed that businesses also appear confident that the long-term threat of coronavirus is decreasing. BDO’s optimism index increased to 104.91 last month, its highest value since July 2021, and 1.10 points above December’s cautious outlook.

The index now sits well above the 95 level, which marks positive trend growth.

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The BDO manufacturing output and optimism indices both also saw a marked improvement, rising by 2.83 and 2.96 points respectively. This was driven by an initial easing of supply-side issues, as well as an improved outlook for coronavirus.

An uptick in output and outlook also pushed the employment index to its highest point since the onset of the pandemic in March 2020. The index rose 0.9 points in January to 109.98.

“Alleviating restrictions and reduced fears around Omicron have provided a helping hand to businesses at the start of the year. It’s reassuring to see the continued growth in employment mirroring the economic recovery and supply chain problems beginning to subside,” Kaley Crossthwaite, partner at BDO, said.

“However, businesses aren’t yet out of the woods. Supply side disruption is expected to continue into 2022 and, when combined with increasing inflationary pressures and rising consumer prices, could place a strain on the outlook for the months ahead.”

It comes as UK construction sector also grew at its fastest pace in six-months in January after higher levels of commercial work.

Data from IHS Markit on Friday showed that business activity rose for the twelfth month in a row last month as concerns about the new Omicron COVID strain started to subside.

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