Despite the removal of most of the remaining pandemic restrictions, the UK’s economy recovering from the lockdown has slowed sharply in the past month as businesses suffer from the worst worker and material shortages in decades.
The latest screenshot is from IHS Markit and Chartered Purchasing and Supply Association (Cips) showed that private sector output growth slowed to a six-month low in August.
The shortage of hired workers and materials is 14 times higher than usual, and it is the most serious since the investigation of business activities started in January 1998.
Separate data from the Federation of British Industry show that since the business lobby began tracking industrial production in April 1977, British manufacturers suffered the most serious parts and raw material inventory problems in August.
In the three months to August, factory output remained resilient by historical standards, and activities were driven by food, beverage, and tobacco producers. However, the weakness of car production-manufacturers have been struggling to cope with the global shortage of microchips-dragged down growth.
Alpesh Paleja, chief economist at CBI, said many companies are feeling the pressure of supply chain disruptions.
“Despite the rebound in activity, continued disruption may stifle future manufacturing growth. Therefore, it is vital that companies and governments continue to work together to quell some friction in the supply chain and broader areas until the event Return to normal levels,” he said.
The IHS Markit/Cips Purchasing Managers Index fell from 59.2 in July to 55.3 in August, indicating that the economy is losing momentum from the blockade. Any reading above 50 indicates expansion.
Although most of the remaining pandemic restrictions were relaxed on July 19, it still emerged. Chris Williamson, chief business economist at IHS Markit, said the increase in coronavirus infections is hampering consumer spending, and companies are struggling with severe supply shortages.
“The number of companies that reported a decline in production due to shortages of employees or materials far exceeds the highest level in the history of more than 20 years of investigations,” he said. “In the manufacturing sector, mainly due to tight supply, industries including automobile production and electronic products have fallen into recession.”
In recent months, job vacancies across the UK have risen to record levels, and many companies have been forced to temporarily shut down or reduce production after their employees were detected by the NHS Covid app.
Global supply chain disruptions and pandemic-related Brexit It also caused a shortage of raw materials. Economists warn that ongoing supply chain problems and staff shortages may push up inflation as companies try to pass higher production costs to consumers.
An IHS/Markit survey of 1,300 manufacturers and service companies showed that the employment rate has increased at the fastest rate since the survey began. The Bank of England and the Ministry of Finance follow the survey to obtain economic warning signals.
Companies that responded to the survey said that in the process of finding new employees, there is increasing pressure to raise wages. There are also widespread reports that rising transportation costs and shortages of raw materials have caused huge price pressures. However, input cost inflation slowed to a four-month low in August, while ex-factory prices rose at the lowest rate since May.
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Cips Group Director Duncan Brock said that shortages are starting to lead to higher wages and higher transportation costs. “The unusually sharp slowdown in overall activity in August sent a harsh warning to the British economy that the level of accelerated growth we saw earlier this summer was unsustainable,” he said.
Data released earlier on Monday showed a similar situation in the Eurozone, although private sector activity managed to maintain a level stronger than that in the United Kingdom despite widespread delays in the supply chain.This pull Markit Eurozone Comprehensive Purchasing Managers Index Initial Value Declined from 60.2 to 59.5 in August from an all-time high In July.
Samuel Tombs, chief British economist at consulting firm Pantheon Macroeconomics, said that the growth rate of UK merchandise export orders for the eighth consecutive month was significantly lower than that of the euro zone. “[This highlights that] Brexit hinders the recovery of the British economy,” he said.
As supply constraints hindered the growth of the world’s largest economy, private sector output in the US economy also slowed sharply in August.this IHS Markit Announces U.S. Comprehensive Purchasing Managers Index It fell from 55.9 in July to 55.4 in August, an eight-month low.
