RECEDING fears about the Omicron variant and an easing of supply chain problems boosted business optimism last month – but businesses “aren’t out of the woods yet”.

The latest Business Trends report from the accountancy and business advisory firm BDO LLP saw business output and optimism both rise.

Malcolm Thixton, lead partner at BDO in Southampton, said: “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.

“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.”

BDO’s output index rose by 7.84 points to a seven-month high of 117.52 after an increase in consumer activity as fears about the new variant subsided.

In December, concerns about Omicron had helped drag the index down by 3.31 points.

Businesses also appeared confident that the long-term threat of Covid-19 was decreasing.

The survey’s optimism index rose to 104.91, its highest since July 2021, and 1.1 points up on December. A figure of 95 marks positive growth.

The BDO manufacturing output and optimism indices rose by 2.83 and 2.96 points respectively, driven by an easing of supply chain problems as well as an improved outlook for coronavirus.

A rise in output and outlook pushed BDO’s employment index up 0.9 points to 109.98, its highest point since the onset of the pandemic in March 2020.

The BDO Monthly Business Trends reports are prepared by the independent economics consultancy Centre for Economics and Business Research (Cebr). 

The indices are calculated by taking a weighted average of the results of the UK’s other main business surveys, including the CBI Industrial Trends Survey and Monthly Trends Enquiry, the Bank of England Agents’ summary of business conditions and the Markit/CIPS Manufacturing and Services Purchasing Managers Index data.