Worker shortages triggered by the “pingdemic” are hitting pubs, bars and restaurants’ trading, according to fresh figures released today.
According to Lloyds Bank’s UK recovery tracker, output at food and drink businesses dropped in July as a result these firms struggling to scale supply amid staff shortages and high rates of self-isolation.
Output at food and drink businesses fell at the fastest pace in eight months, with Lloyd’s recovery index for the category dropping to 45.6 in July from 60.5 in June. A reading above 50 indicates output is rising.
Workers have been reluctant to return to leisure and hospitality jobs due to concerns that their roles may not be viable in the long term.
Younger workers, who typically represent a large proportion of this sector’s workforce, have entered education to strengthen their skill sets to make them more attractive to employers who typically pay relatively higher wages. This has shrunk the pool of labour food and drink businesses’ can draw on.
Firms are struggling to absorb higher costs as a result of strengthening incentives in a bid to attract talent, according to Lloyds’ research.
“Businesses in the services sector saw costs rise at an unprecedented rate since the services input prices index began in July 1996,” Lloyds said.
Businesses are also facing higher costs for raw materials stemming from shortages for inputs such as metals and timber as a result of supply chains bucking under the weight of a resurgence in global demand.
Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking, said: “As the economy edges back towards pre-pandemic GDP levels, there will understandably be less capacity for such rapid and out-sized gains.”
“Pipeline issues represent early indicators of the potentially broader inflationary pressures to come. While UK annual CPI inflation slowed in July, this will likely prove a temporary respite, particularly if businesses continue to face further price pressures.”
Two out of the 14 UK sectors tracked by Lloyds reported shrinking output growth. This is the first time that expansion was not unanimous across all sectors since March.