2009.03.0208:32:00UTC+00UK Business Sentiment Improves As Firms Adapt To Recession - Survey

Short and medium term business confidence in the UK rose simultaneously in February for the first time in 13 months, the latest Business Trends report by accountants and business advisers BDO Stoy Hayward LLP showed Monday.

However, the situation in the UK labor market continue to be weak. BDO's Employment Index fell to 91.7 in February from 94.2 in January. It suggests that a further 320,000 people will lose their job over the next three months.

At the same time, the Optimism Index, which measures business confidence two quarters ahead, rose to 90.5 in February from 89.9 in January. Similarly, the Output Index that measures order book strength and short run turnover expectations in the next quarter edged up to 88.3 in February from 88.1 in January 2009.

"The modest rise of BDO's Output and Optimism indices suggests businesses have accepted the realities of the recession and are adapting their plans to manage against the downturn," the report said.

Peter Hemington, Partner at BDO Stoy Hayward said, "Optimism remains low and businesses expect the economy to continue to contract, but companies are now adapting their business models for an uncertain future."

"It's still too early to say if business confidence has hit rock bottom and we've already seen a number of false dawns, but this month's modest increases are encouraging. We must watch carefully to see if this is the start of an upward trend," Hemington said.

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