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Highlights
- UK business confidence has declined to its lowest point since the third nationwide Covid-19 lockdown.
- While business optimism dropped to 94.63, output sank to 93.10, as per BDO’s business trends report.
- This contraction in indices signals an upcoming recession.
With recession alarms ringing in the UK, business confidence has deteriorated, reaching its lowest point since the country was hit with a third nationwide lockdown in February last year. According to the most recent edition of BDO’s business trends report, the lowest business optimism and output levels since that time were seen in October. While business optimism dropped to 94.63, output sank to 93.10.
The 95-point mark is considered to be the dividing line between growth and weakening, and the latest figures are below this mark. This contraction in indices signals an upcoming recession. The decline in manufacturing and services indices for two consecutive months contributed to the slump in output productivity.
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Amid the growing cost of living crisis, consumer demand has been heavily affected, dragging down the services output. On the other hand, manufacturing activity has been pushed into the negative zone amid the rapidly soaring cost pressures and the continued wrecking of the worldwide logistics networks.
In line with the darker macroeconomic situation driving a fall for BDO’s Optimism Index for seven months in a row, business confidence in the country also followed a parallel downward path. Following October’s energy price cap hike, BDO’s inflation index reached a record level of 120.67 over the month.
While business confidence is down and recession fears are rising, UK investors can keep an eye on the following stocks trading on the London Stock Exchange.
RPS Group plc (LON:RPS)
The internationally leading professional services group, RPS Group plc, has given YTD (year to date) and one-year returns of 77.71% and 74.60%, respectively, as of 7 November. As the market opened on Monday morning, RPS shares were trading at GBX 220.00 at around 8:00 AM (GMT). With a positive EPS (earnings per share) of 0.02 and a P/E ratio of 71.08, the group’s market cap at present stands at £610.52 million.
ME Group International plc (LON:MEGP)
The company running automatic instant-service equipment, ME Group International plc, has given YTD and one-year returns of 42.22% and 35.35%, respectively, as of 7 November. As the market opened on Monday morning, MEGP shares were trading at GBX 93.40 at around 8:00 AM (GMT). With a positive EPS of 0.06 and a P/E ratio of 9.22, the group’s market cap at present stands at £353.10 million.
Nanoco Group plc (LON: NANO)
The leading cadmium-free quantum dots producer, Nanoco Group plc, has given YTD and one-year returns of 83.62% and 73.71%, respectively, as of 7 November. As the market opened on Monday morning, NANO shares were trading at GBX 37.00 at around 8:00 AM (GMT). With a negative EPS of -0.01, the group’s market cap at present stands at £119.30 million.
