Business output growth drops once more as firms face rising costs
Business output growth has fallen for the sixth month in a row as businesses face labour shortages and soaring energy prices.
Output growth has hit the lowest level since March, when the country was in the depths of lockdown, according to accountancy firm BDO’s latest output index.
The index, which looks at the manufacturing and service sectors, dropped 105.23 points in September to 103.35 in October.
Supply chain chaos has been especially tough for manufacturing, which saw its output growth fall by 2.09 points to hit 97.03 in October. The 95-mark separates growth and decline.
A slowdown in the services sector was driven by staff shortages, with output dropping 1.85 points to 104.15 in October.
The end of the furlough scheme at the end of September caused the firm’s employment index to drop for the first time since January. The employment index fell 1.13 points to 107.65 in October.
Kaley Crossthwaite, partner at BDO, 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 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.”