Business output growth falls as supply chain disruption threatens to derail economic recovery

11 October 2021

  • BDO Output Index falls to lowest level since height of lockdown following months of decline
  • Inflation accelerates after soaring energy prices and supply chain disruption take toll
  • Small rise in Employment Index brings it to 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, 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 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 seeking employees. The index rose by just 0.39 points to 108.99 in September, a muted rise compared to previous months. While 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

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.

“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 Budget will be watched closely later this month to see whether the government steps in to restore the confidence felt through the summer.”


Overview of the BDO indices:

An overview of all four indices is provided in the table below, detailing figures for the last three months and the same month of the previous year, to allow for comparison. 100 = average value. Above 95 = positive.




September 2021 (Figures for this report)

August 2021

July 2021

September 2020

BDO Output Index





BDO Optimism Index





BDO Inflation Index





BDO Employment Index





Methodological notes 

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world. 

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high-growth businesses that fuel the economy.  

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed.  

BDO LLP operates in 18 offices across the UK, employing 6,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

BDO’s global network
The BDO global network provides business advisory services in 167 countries, with 91,000 people working out of 1,658 offices worldwide. It has revenues of $10.3bn.  

The BDO Monthly Business Trends Indices are prepared on behalf of BDO LLP by the Centre for Economics and Business Research ltd., a leading independent economics consultancy. Cebr has particular strengths in all forms of macroeconomic and market forecasting for the UK and European economies and in the use of business survey techniques.
The indices are calculated by taking a weighted average of the results of the UK’s main business surveys. It incorporates the results of the quarterly CBI Industrial Trends Survey (and the CBI Monthly Trends Enquiry which is carried out in the intervening months); the Bank of England Agents’ summary of business conditions; and the Markit/CIPS Manufacturing and Services PMI data.
Taken together the surveys cover over 4,000 different respondents from companies employing approximately five million employees. The respondents cover a range of different industries and a range of different business functions. Together they make up the most representative measure of business trends available.

The surveys are weighted together by a three-stage process. First, the results of each individual survey are correlated against the relevant economic cycles for manufacturing and services. This determines the extent of the correlations between each set of survey results and the relevant timing relationships. Then the surveys are weighted together based on their scaling, on the extent of these correlations and the timing of their relationships with the relevant reference cycles. 

Finally, the weighted total is scaled into an index with 100 as the mean, the average of the past two cyclical peaks as 110 and the average of the past two cyclical troughs as 90.

The results can not only be used as indicators of turning points in the economy but also, because of their method of construction, be seen as leading indicators of the rates of inflation and growth.