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Severe labor and supply shortages have driven economic growth in Britain to the lowest levels since pandemic restrictions were relaxed in March, according to a closely watched business survey.
The latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) showed that private sector output growth slowed in August as companies battled severe shortages as costs rose at the pace of the economy. faster since the late 1990s.
Trade activity weakened in the dominant services sector, which accounts for 80% of the economy, while the slowdown was most pronounced in the manufacturing sector where severe supply chain disruptions held back the growth of the economy. production of factories.
A sign that the post-lockdown economic recovery is running out of steam, business expectations for the coming year have fallen to their lowest since January and new orders hit their lowest level in seven months.
The IHS Markit / Cips Purchasing Managers Flash Index fell from 54.1 in September to 54.8 in August, on a scale where anything above 50 indicates expansion. City economists had forecast a reading of 54.5.
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Chris Williamson, chief economist at IHS Markit, said the barometer of trade activity would add to concerns that the UK economy was heading into a period of stagflation, a period of weak economic growth accompanied by rapid growth in consumer prices.
The survey of around 1,200 companies and manufacturers in the service sector, which is closely monitored by the Bank of England and the Treasury for warning signs of the economy, showed a sharp acceleration in costs of companies. Against a backdrop of rising transportation costs, product shortages and rising staff salaries, companies increased their prices at the fastest pace since the survey began in July 1996.
“Meanwhile, shortages are driving prices up to unprecedented rates, with companies passing on higher fees from suppliers and increases in staff wages. Brexit has often been cited as having exacerbated the supply and labor market constraints associated with the global pandemic, as well as being often blamed on lost export sales, ”said Williamson.
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