The Q1 2010 results indicate that the UK upturn is still on course, but the recovery is weak and the economy is facing serious risks. The Q1 results are positive for the service sector, with most service balances now in positive territory, and most showing improvements. The manufacturing results are disappointing, with many key balances worsening and still in negative territory. The Q1 domestic manufacturing balances signal stagnation.

The Q1 manufacturing employment balance recorded a large decline, and moved significantly into negative territory. It is encouraging that most Q1 export balances improved, and they remain relatively strong for manufacturing. The confidence balances, though weak by prerecession standards, are firmly in positive territory and confirm business resilience in the aftermath of the recession. However, it is disturbing that some critical balances are still in negative territory in Q1, for both manufacturing and services, notably investment in plant and machinery and cashflow.