Business output growth across the UK has slowed for the fifth consecutive month as supply chain disruption and staff shortages continue to restrict prospects of an economic recovery, according to the latest Business Trends report from accountancy and business advisory firm BDO LLP.
The BDO Output Index fell by 5.02 points to 100.69 in September, the lowest level since March this year at the height of lockdown. This decline, across both the manufacturing and services sectors, “lays bare the ongoing impact of supply chain disruption and staff shortages on businesses, potentially de-railing plans for recovery”.
BDO’s Consumer Inflation Index also jumped by 2.39 points in September to 102.70, representing a near 10-year high, driven by the rocketing price of energy and fuel. The index now sits well above the 100 level that indicates average trend growth, suggesting consumers will have to adjust to rising prices over the coming months.
A slowdown in BDO’s Employment Index growth also reflects the difficulties that many businesses are having seeking employees, says the firm. The index rose by just 0.39 points to 108.99 in September, a muted rise compared to previous months. Although the index has returned to its pre-pandemic level, last month’s termination of the furlough scheme could mean further volatility ahead for the jobs market.
Kaley Crossthwaite, partner at BDO LLP, said: “While a gradual deceleration in the pace of growth is to be expected as economies normalise after the pandemic, it is clear that acute labour shortages and supply chain disruption are weighing heavily on productivity. Ultimately, this could mean consumers end up paying more for less this winter.
“Many businesses are caught between a rock and a hard place. Long-term planning for a post-pandemic and post-Brexit economy is crucial, but the significant challenges at their door make it increasingly difficult to focus beyond these short-term issues. The chancellor’s Autumn Statement will be watched closely later this month to see whether the government steps in to restore the confidence felt through the summer.”