Business output growth falls as supply chain disruption threatens economic recovery
- BDO Output Index falls to lowest level since height of lockdown
- Inflation accelerates as soaring energy prices and supply chain disruption take toll
- Employment Index at highest level since March 2020 despite businesses struggling to recruit staff
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. The BDO Output Index fell by 5.02 points to 100.69 in September, the lowest level since the depths of lockdown. This decline, across both the manufacturing and services sectors, reveals the impact of supply chain disruption and staff shortages on businesses.
BDO’s Consumer Inflation Index also jumped by 2.39 points in September to 102.70, representing a near ten-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 recruiting staff. The index rose by just 0.39 points to 108.99 in September, a muted rise compared to previous months.
Commenting on the results, 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.
Download September 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.