Article:

Business Trends

08 November 2021

Business output growth slows as labour shortages and energy prices hit businesses

  • BDO Output Index falls for sixth consecutive month to reach lowest level since March
  • Employment Index down for the first time since ‘Winter lockdown’
  • Inflation Index continues to accelerate

Business output growth across the UK has slowed for the sixth consecutive month - bringing it to the lowest overall level since March - as supply chain disruption and staff shortages continue to hit businesses.

Declines were seen across both manufacturing and services, which fell to their lowest respective levels since March. The Output Index dropped from 105.23 points in September to 103.35 in October.

Manufacturing output growth, which has been particularly badly impacted by supply chain disruption, fell by 2.09 points to hit 97.03 in October - edging closer to the 95-mark which separates growth and decline. Staff shortages have been the main driver behind the slowdown in output growth in the services sector, which dropped by 1.85 points to 104.15 in October.

The termination of the furlough scheme at the end of September caused BDO’s Employment Index to fall for the first time since January. The Employment Index fell by 1.13 points to 107.65 in October. However, this dip is expected to be short-term

Download October 2021 report

The chart below shows a sample of recent data from the Business Trends report. Any scores below 95 represent a contraction or a negative growth rate.

What is Business Trends?

The Business Trends report is one of the key monthly indicators of the performance of the UK economy, and provides an accurate and up-to-date picture of the environment that businesses are facing.

Business Trends covers more than 4,000 respondents from companies employing approximately five million employees across the UK. The report includes separate indices for services and manufacturing sector optimism and output, as well as indicators for UK inflation and employment.

Since 1992, the BDO Business Trends report has provided the most representative monthly measure of business output and optimism available. The results can be used as indicators of turning points in the economy as well as, because of their method of construction, leading indicators of the rates of inflation and growth.

See a sample Business Trends report

How is Business Trends prepared?

Indices are prepared on behalf of BDO LLP by the Centre for Economics and Business Research (CEBR), a leading independent economics consultancy.

Survey's contributing to Business Trends

Four indices covering output, optimism, inflation and employment, are calculated by taking a weighted average of the results of the UK's main business surveys, including:       

  • CBI Industrial Trends Survey
  • CBI Monthly Trends Enquiry
  • Bank of England Agents' summary of business conditions
  • Markit/CIPS Manufacturing and Services PMI data    

Taken together, these surveys cover more than 4,000 different respondents from companies employing approximately five million people in the UK. Collectively, they comprise the most representative measure of economic indicators and business confidence available. The respondents cover a range of different industries and business functions to deliver a comprehensive picture of the general economic outlook.