The index fell to 90.01 in December, down from 93.45 in November, marking its weakest reading since January 2021, driven by uncertain demand prospects and subdued expectations for future turnover and employment heading into 2026.
The decline in confidence was broad-based across both manufacturing and services in the country, despite a small uptick in the output index, which rose by 1.53 points to 98.27 in December as a result of stabilising conditions in the services sector, a BDO release said.
However, the output index remains firmly below long-term growth levels from the past 25 years, pointing to only tentative improvement. Despite month-on-month gains, the index has remained within the 95-100 range since January 2025, with continued weak growth rather than a meaningful rebound.
In the manufacturing sector, output remained in negative growth territory for December at 94.26 as subdued confidence and high operating costs continue to weigh down growth.
In effect, conditions eased slightly at the end of the year, supported by lower borrowing costs following the Bank of England’s rate cut and easing input price pressures, but activity has yet to shift into a sustained recovery and the economy remained under pressure, despite being in the traditional ‘Golden Quarter’.
The close relationship between business confidence and economic activity suggests that persistently low optimism is likely to keep output constrained into next year, even as easing inflation offers limited relief, the release added.
ALCHEMPro News Desk (DS)
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