Staff shortages in fresh Covid wave slow UK’s bounce-back

A WAVE of new Covid infections that led to staff shortages in many industries slowed UK economic growth in July, a closely watched survey shows.

The IHS/Markit CIPS PMI index came in at 57.7, down from 62.2 in June. While any number above 50 is positive, the figures were the lowest for four months.

Chris Williamson, chief business economist at IHS Markit, said: “July saw the UK economy’s recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook.”

Transport and hospitality were the hardest hit by staff shortages, as many were forced to isolate. That probably means that GDP growth slowed in the third quarter of the year.

Duncan Brock, group director at CIPS, said: “Acute material and staff shortages in certain sectors interrupted the rhythm of recovery in private sector business as signs of malaise crept in affecting output, new orders and business optimism.”

UK retail sales did rise by 0.5% between May and June, as shoppers splashed out on more food to enjoy the Euro 2020 tournament.

Sales were up 9.5% when compared with February 2020 levels.

Sales volumes at food stores climbed 4.2% last month, although non-food store shops saw declines of 1.7%, with falls in spend on furniture and clothes.

Darren Morgan, of the Office for National Statistics, said June’s sales picked up again following the dip seen the prior month, “with the main driver coming from food and drink sales, boosted by football fans across Britain enjoying the Euros”.