Businesses across the UK are still hampered by supply chain problems, energy price rises and staff shortages, and new figures show that output growth has fallen for the sixth month in a row.
In the latest Business Trends report from accountancy firm BDO, the Output Index decreased from 105.23 points in September to 103.35 in October. This figure provides a snapshot of output in the manufacturing and services sectors by weighting macroeconomic data from the UK’s main business surveys.
Declines were seen across both manufacturing and services, which fell to their lowest respective levels since March.
Manufacturing output growth, which has been hit hard by supply chain disruption, fell by 2.09 points to 97.03 in October — edging closer to the 95-mark which separates growth and decline. Output growth in the services sector dropped by 1.85 points to 104.15, with worker shortages the main driver behind the slowdown.
The termination of the furlough scheme at the end of September also caused BDO’s Employment Index to fall for the first time since January, when a further winter lockdown curtailed economic activity. The Employment Index fell by 1.13 points to 107.65 in October, although this dip is expected to be short-term as the economy continues to recover throughout 2022 and demand for workers grows.
Commenting on the October figures, BDO partner Kaley Crossthwaite said: “Businesses are facing an increasingly difficult winter. Between rising inflation and a lack of staff, 2022 could be a difficult year for companies who have been forced to to prioritise short-term problems over long-term growth. At the same time, consumers are beginning to see the impact of these shortages with rising fuel and energy prices, which may in turn lead to cutbacks in discretionary spending.
“In the final months of the year, businesses and consumers alike will be hoping that the economy can find some Christmas spirit over November and December and help take us into the new year on a high.”