7.8 C
Manchester
Friday, May 23, 2025
BusinessBusiness struggles loom as confidence and output growth fall

Business struggles loom as confidence and output growth fall

October saw BDO’s Output and Optimism Indices fall to their lowest levels since the third national lockdown in February 2021, as record-high inflation continues to dampen the economy and prompt fears of a recession, according to the latest Business Trends report from accountancy and business advisory firm, BDO.

The latest figures indicate that inflationary pressures are to blame for the decline across three of BDO’s four indices, as Optimism, Output and Employment all recorded their weakest readings for at least six months. BDO’s Inflation Index reached an all-time high in October forcing businesses to re-evaluate production in line with demand and supply-side headwinds and exercise caution in their outlook and hiring intentions.

October saw BDO’s Output and Optimism Indices plummet to 93.10 and 94.63, respectively, their lowest levels since the third national lockdown in February 2021. Both indices now sit in contractionary territory, below the 95-point mark – regarded as the watershed between growth and decline, an indicator of a recession.

The dip in productivity was driven by a fall across both the Services and Manufacturing Indices for the second month in a row. Continued disruption to global logistics networks and increased input prices have pushed manufacturing activity into negative territory, whilst the cost-of-living crisis has impacted consumer demand, driving down services output.

Confidence amongst businesses followed a similar downward trajectory as the weaker macroeconomic environment drove a seventh consecutive month of decline for BDO’s Optimism Index.

BDO’s Inflation Index rose by 1.67 points in October to a record high of 120.67 following an increase in the energy price cap which caused consumer price inflation to climb. At the same time, diminished spending power due to a weaker currency put considerable upwards pressure on input inflation leading to a record high of 121.26, as businesses importing goods paid higher prices.

Driven by inflationary fears, the Employment Index mirrored waning confidence among businesses with a fall of 1.14 points to 113.05 last month. However, the index has remained resilient, and the unemployment rate stood at a historic low of 3.5% on the most recent reading in the three months to August.

Despite the index remaining firmly in positive territory, hiring intentions are set to decline in the longer-term as businesses continue to tackle mounting inflation and a recession, resulting in further falls in the index over the coming months.

Ed Dwan, Partner and Head of BDO in the North West, said: “A contraction in both optimism and output is a concerning bellwether for firms, as inflation is expected to continue climbing in the run-up to Christmas. A weaker currency and drop in consumer spending power will have real and tangible consequences for firms relying on imports or customers in the retail and services sector, alongside the knock-on effects of managing political and economic uncertainty.  

“We already know that rising energy costs are a top concern for nearly half of mid-sized businesses this winter as we’re only just beginning to see the impacts of the energy price cap rise. Now, on the back of the biggest interest rate rise in decades, businesses also face a hike in the cost of borrowing, which could significantly impact their ability to invest.  Firms will be looking to the Autumn Statement for the support they need as they navigate a tough period ahead.” 

News Desk
News Deskhttps://www.businessmanchester.co.uk/
The Business Manchester News Desk team is a collective of experienced journalists and editors dedicated to delivering comprehensive business news and insights from the Manchester area and beyond. With a strong background in finance, technology, property, and innovation, our team ensures that our readers stay well-informed about the latest trends and developments in the business world. Through in-depth reports and insightful analysis, the Business Manchester News Desk team is committed to providing high-quality journalism to its audience.
Latest

Grind heads north in exclusive partnership with Arighi Bianchi

Arighi Bianchi, the renowned 170-year-old furniture destination based in Macclesfield, Cheshire, has announced an exciting new partnership with cult London coffee brand Grind. The collaboration will...

FREESMO Rolls Out Amazon Voucher Offer for New Customers Ahead of Vape Ban

In a bid to encourage more smokers to switch to safer alternatives, FREESMO has unveiled a new customer reward scheme—offering a £20 Amazon voucher...

Gutter cleaning checklist every homeowner in the North West should know

When it comes to home maintenance in the North West, one task consistently gets ignored—gutter cleaning. It’s out of sight, out of mind… until something...

Arklow Wastewater Plant sets new standard for sustainable infrastructure

The Arklow Wastewater Treatment Plant - a €139 million project that ends decades of raw sewage discharge into the River Avoca - has officially...
Subscribe to our newsletter
Business Manchester will use the information you provide on this form to be in touch with you and to provide updates and marketing.
Don't miss

Global tech fulfilment platform delivers profitable, double-digit revenue growth

A global tech enabled fulfilment provider has posted record revenues for FY25.  In the year ending March 31, 2025, fulfilmentcrowd – a global fulfilment platform,...

From Tragedy to Triumph: GP Opens London’s First Skin Café for Women Over 50

In a moving tribute to resilience and womanhood, Dr Amina Adeniran — NHS GP and founder of The Super-Skin Clinic — is opening London’s...

Applications Open for £10,000 Dover Prize to Support UK-Based Artists Over Two Years

The Dover Prize 2025 is now accepting applications, offering UK-based visual artists and creative practitioners a unique opportunity to secure a two-year bursary worth...

Grind heads north in exclusive partnership with Arighi Bianchi

Arighi Bianchi, the renowned 170-year-old furniture destination based in Macclesfield, Cheshire, has announced an exciting new partnership with cult London coffee brand Grind. The collaboration will...

More News

FREESMO Rolls Out Amazon Voucher Offer for New Customers Ahead of Vape Ban

In a bid to encourage more smokers to switch to safer alternatives, FREESMO has unveiled a new customer reward scheme—offering a £20 Amazon voucher...

Understanding the French HR market: A guide for Manchester companies

For Manchester-based businesses looking to expand into the French market, understanding the nuances of human resources management in France is essential. From complex labour laws...

Pop Specs Celebrates Four-Year Anniversary with National Recognition and Global Ambitions

Pop Specs, the trailblazing eyewear brand best known for its dynamic pitch on BBC’s Dragons’ Den, is proudly celebrating four years in business this...