UK recovery slows as staff shortages plague firms

LONDON - Staff and supply shortages have taken their toll on the UK’s economic recovery this month, according to a closely watched survey.

The IHS Markit/CIPS Composite Purchasing Managers’ Index (PMI) for August hit a six-month low of 55.3, falling from 59.2 in July.

Any reading above 50 indicates growth, but the bounce-back from the pandemic is losing momentum, said researchers.

CIPS group director Duncan Brock said the figures were “a stark warning.”

He said the “abnormally large slowdown in overall activity” suggested that the accelerated levels of growth seen earlier in the summer were “not sustainable.”

“The worst shortages of staff and materials on record are mostly to blame,” he added.

“Despite Covid-19 containment measures easing to the lowest since the pandemic began, rising virus case numbers are deterring many forms of spending, notably by consumers, and have hit growth via worsening staff and supply shortages,” said IHS Markit economist Chris Williamson.

“Supplier delays have risen to a degree exceeded only once before - in the initial months of the pandemic - and the number of companies reporting that output had fallen due to staff or materials shortages has risen far above anything ever seen previously in more than 20 years of survey history.”

Firms have complained that self-isolation requirements for contacts of people with Covid have made it hard for them to maintain staffing levels.

However, those rules were dropped from August 13 for people who have been doubly vaccinated.

Meanwhile, another survey showed manufacturing output growth easing in the three months to August, but remaining firm by historical standards.

However, stock levels weakened to a new low for the third consecutive month, according to the latest monthly CBI Industrial Trends Survey. – BBC.