London - An index measuring optimism among British businesses hit its highest level for 22 years in January, providing more evidence of a rebound in the UK economy.
The optimism index produced by accounting firm BDO, which measures business performance expectations two quarters ahead, rose to 103.8 in January, up from 103.4 in December, reaching its highest level the index began in 1992.
BDO's employment index, which measures UK businesses' hiring intentions over the next six months, reached 101.3 in January, its highest level since August 2008, signalling additional job creation is on the way.
Britain had its strongest economic performance since the financial crisis in 2013, achieving growth of 1.9 percent and a string of economic indicators over the past few months has suggested the economy is recovering faster than expected.
“UK business confidence has hit record highs as we enter 2014 and we expect the economy to grow rapidly in the first half of the year,” Peter Hemington, partner at BDO, said.
“Companies are raising headcounts in response to rising client demand and the data suggests that the unemployment rate is likely to fall below the Bank of England's 7.0 percent threshold for considering raising interest rates in the very near future.”
The Bank of England had originally planned to think about raising interest rates when unemployment fell to 7 percent. The unemployment rate dropped to 7.1 percent in the three months to November. BoE policymakers have said they would not be hurried into raising rates.
BDO's optimism indexes are calculated using previously released data including purchasing managers' surveys and surveys by the Confederation of British Industry and the Bank of England.
Taken together, the surveys cover 4 000 different respondents from companies employing approximately five million staff. - Reuters