Due to staff shortages and supply chain issues, the UK’s recovery has slowed

Due to staff shortages and supply chain issues, the UK’s recovery has slowed



British business and economic dynamics

A closely watched survey on Monday showed that the United Kingdom’s economic recovery slowed in August due to staff shortages and supply chain constraints that made it difficult for companies to meet demand.

The preliminary or provisional comprehensive purchasing managers output index released by the research organization IHS Markit and the Chartered Institute of Purchasing and Supply in the United Kingdom fell from 59.2 in July to 55.3 in August, which was lower than analysts’ expectations and fell to a six-month low.

The slowdown in the service and manufacturing industries is obvious, although the survey reading is still above 50, indicating that most companies reported an increase in activity from the previous month. People are optimistic about their business prospects in the coming year and support rapid recruitment.

The service industry business activity index fell from 59.6 in July to 55.5, while the manufacturing purchasing managers’ index fell slightly from 60.4 to 60.1-the manufacturing output sub-index fell even more.

For manufacturers, the main problem is staff shortages due to self-isolation and vacancies, rising transportation costs and shortages of raw materials have exacerbated price pressures. According to IHS Markit, supply constraints are the main reason for the decline in industries such as automobile production and electronics.

Another monthly survey of manufacturers released by the CBI employers’ organization on Monday portrayed a similar situation. Companies reported that orders continued to remain strong, but due to capacity constraints, output growth slowed, and inventory adequacy ratios were at their worst levels in 2019. This research has been conducted for 63 years.

In the service industry, some companies surveyed by IHS Markit said that activities have weakened — such as residential properties after the full stamp duty holiday — but most companies are more worried about increasing the number of employees to rebuild production capacity as the economy continues to reopen.

“In the first few months of the pandemic, supplier delays reached unprecedented levels, and the number of companies reporting production declines due to shortages of employees or materials far exceeded any record survey history in more than 20 years,” IHS Said Chris Williamson, Markit’s chief business economist.

Duncan Brock, Cips’ group director, said the slowdown in activity was a “stern warning.” .. The level of accelerated growth that we saw earlier this summer is unsustainable.”

These data were collected between August 12th and 19th, indicating that even after the most serious “plague” has passed, employee absenteeism and recruitment difficulties are still a limiting factor. The quarantine rules were dropped and relaxed on August 16.

Salomon Fiedler, an economist at Berenberg Bank, pointed out that compared with other parts of Europe, the slowdown in growth in the UK is much more pronounced, with severe staff shortages hindering service output and even exceeding concerns about Covid-19 infection.

Samuel Tombs of Pantheon Macroeconomics, a consulting firm, said the survey showed that the economic recovery was “beginning to be hindered by supply constraints,” but pointed out that demand growth has also slowed, and merchandise export orders are weaker than the euro zone.For the eighth consecutive month, reflecting BrexitImpact.

He said that this made it impossible for companies to pass on cost increases to customers, and the rate of increase in factory door prices was the lowest since May.

CBI economist Alpesh Paleja said: “Despite a rebound in activity, continued disruption may stifle future manufacturing growth,” adding that the government should help ease friction in the supply chain until activity returns to normal levels.


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