UK's biz confidence declines in Sept amid fears of looming recession

The BDO Employment Index, which provides insights into hiring trends, recorded its lowest level in almost ten years. The figure for September dropped for the third month in a row, settling at 102.72, a decline of 2.23 points. This slump is attributed to businesses facing challenges in maintaining their staff due to rising borrowing costs, increased wage growth, and a decrease in customer demand. Though the September reading remains positive, there are concerns that it might face further decline, especially if a recession takes hold.

The last time the employment index recorded such a weak reading was in September 2014, amidst the slow recovery from the global financial crisis. The most significant job pressures are currently being felt in sectors like wholesale and retail, as per BDO.

BDO's Output Index, which gauges economic output, also faced a decline for its third consecutive month, coming in at 91.87 in September. This marks its second month under the pivotal 95-point benchmark, which differentiates between economic expansion and contraction. To find a similar low, one has to go back to March 2021, during the third national lockdown.

The decline in output is predominantly attributed to the manufacturing sector, which reported a reading of 90.10, reflecting the adverse impacts of commodity price pressures.

These sub-95 readings for the manufacturing output index signal potential challenges ahead, with expectations of quarterly GDP contractions in the forthcoming two quarters.

UK business confidence also felt the pinch in September, declining for the second time in three months to 99.79. This 0.57-point drop was largely influenced by reduced output in the manufacturing sector, increased borrowing costs, and prevailing uncertainty around government policies.

However, BDO's Inflation Index experienced a slight rise, registering 100.52 in September, up from 100.47 in August. This change halted its ten-month declining trend. The last surge was in October 2022, primarily due to escalating energy bills. The latest uptick is associated with increased commodity prices, resulting from disrupted supply chains. Yet, there's anticipation that consumer price inflation might decelerate, as indications suggest a peak has been reached in several vital consumption sectors, including transport and energy.

Fibre2Fashion News Desk (DP)