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UK recovery “falters” as retail sales plummet; supply crisis hits factory growth – business live | Business

By on October 22, 2021 0

UK businesses have been hit by record cost increases, with UK factories’ output growth almost at a standstill amid the supply chain crisis.

Rising wages and the worsening global supply chain crisis have driven costs up at a record pace – input price inflation has reached the fastest rate since the index began in January 1998.

The growth of production in factories increased only marginally. UK manufacturing flash index fell to 50.6, the lowest reading since February, and close to stagnation, reports data firm Markit.

Manufacturers said they were struggling to keep up with customer demand and mostly blamed capacity constraints and disruptions at their factories due to severe staff and raw material shortages, as well as falling sales. for export.

Around 64% of UK manufacturers reported a deterioration in supplier delivery times in October, while only 1% saw improvement.

Stocks of finished goods have been depleting at a rapid rate as goods producers struggle to meet customer demand.

Faced with shortages, companies have built up their inventories of raw materials and parts at the fastest pace since December 2020.

But overall, the survey shows an acceleration in growth this month, led by the service sector.

Companies reported higher demand due to the retreat in pandemic restrictions (the problem, however, was meeting that demand).

IHS Markit PMI ™
(@IHSMarkitPMI)

🇬🇧 The latest flash data for the UK showed a sharp rise in activity with the #PMI at a 3-month high (56.8). The expansion was led by the service sector as severe labor and equipment shortages weighed on production growth among manufacturers. Read more: https://t.co/EqUm5YEu7D pic.twitter.com/CZUb11I8Um


22 October 2021

Here are the details (any reading above 50 shows growth)

  • Flash UK Composite Output Index October: 56.8, three-month high (September final: 54.9)
  • Flash UK Services Business Activity Index October: 58.0, three-month high (September end: 55.4)
  • Flash UK Manufacturing Output Index October: 50.6, 8-month low (September end: 52.7)
  • Flash UK Manufacturing PMI October: 57.7, 2-month high (September end: 57.1)



Photography: IHS Markit

Chris Williamson, chief economist at IHS Markit, said the UK economy picked up speed in October, despite slowing factory output.

However, the expansion appears to be increasingly dependent on the service sector, which is likely to slow as Covid-19 cases increase.


Growth is also accompanied by an unprecedented rise in inflationary pressures, which will inevitably spill over into higher consumer prices in the coming months. “The news comes at a time when the Bank of England is already leaning towards raising interest rates to hedge against entrenched inflation expectations.

Record reading of PMI price indicators will inevitably fuel these inflation concerns and strengthen the case for higher interest rates.

However, the economic growth signals from the PMI remain less convincing from a political point of view. The service sector is clearly in an ideal situation as the UK has seen more and more lives and livelihoods return to normal. Part of the growth dynamic will therefore fade as this rebound passes.

In addition, the increase in the number of Covid-19 cases poses a downward risk for growth in the coming months, potentially deterring certain service-oriented activities among consumers in particular and potentially leading to a re-application of the health restrictions as winter approaches. ”



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