UK labor shortage hits consumer firms as car production slumps a job

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Photo: Andy Raine/EPA

Good morning, and welcome to our renewed coverage of the global economy, financial markets, the eurozone and business.

Supply chain shortages in the UK continue to grip the economy, as consumer-facing companies grow increasingly concerned about the economic outlook as they struggle to find workers… and car production declines.

Businesses such as bars, restaurants and travel companies became pessimistic about the economic outlook in August, according to a new survey conducted by the Central Bank of Iraq this morning. It blames a shortage of workers to fill jobs, adding to rising costs and operational difficulties after the shutdown.

Optimism about the overall business situation among consumer services firms fell to 17% this month, down from a positive reading of 47% in May.

Consumer services firms also reported record labor shortage concerns — and after the strongest growth since February 2018, the outlook for the next quarter is “fairly bleak,” the survey says.

These consumer-focused companies also expect profits to fall in the next quarter, and despite this labor shortage, many expect to cut staff in the next quarter.

CBI also identifies a division within the service economy. Commercial and professional services companies are posting strong volume growth and expect this growth to continue for three months.

Charlotte Dundee, chief economist at CBI says:

“The service sector clearly performed well in the three months to August, revealing strong volumes and earnings growth in our latest survey as the economy reopens over the summer. However, expectations are expected to vary among sub-sectors over the next quarter, as the outlook deteriorates. expected in consumer services.

Companies in sectors such as hotels, restaurants and travel do not expect this strength to continue into the next quarter, reflecting the pressure that consumer services companies continue to face.

Christophe Barraud (@C_Barraud)

🇬🇧 UK labor shortage leaves consumer business bleak, says CBI – Bloomberg

August 26, 2021

This tight labor market should put more power in the hands of workers. As Labor MP Claudia Webb noted on Twitter – companies struggling to fill critical positions need to be paid appropriately:

ClaudiaWebbe MP (ClaudiaWebbe)

Labor shortage? No.

lack of wages.

August 25, 2021

Manufacturers are also struggling – with British car production dropping to its lowest level in July since 1956. A persistent global shortage of semiconductor chips has hit car companies, with workers also forced to self-isolate due to COVID-19..

Mike Howes, CEO of SMMT, warns of persistent ingredient shortages:

While the impact of the ‘pandemic’ will diminish as the rules for self-isolation change, the global shortage of semiconductors is showing few signs of abating.

UK carmakers built 53,400 cars in July, down 37.6% compared to the same month in 2020. More here:

As we covered yesterday, business leaders urged the government to relax post-Brexit immigration rules to allow EU truck drivers to bridge the gap, or risk Christmas disruption.

But ministers remain firm, saying companies need to train local drivers.

A spokesperson for the Ministry of Interior said:

“The British people have voted repeatedly to end freedom of movement and take back control of our immigration system. Employers should invest in our local workforce rather than relying on labor from abroad.”

The Office for National Statistics is publishing its latest real-time indicators on the UK economy today, which will show how business is going.

We also get an updated estimate of US economic growth, and the latest jobless claims numbers, which will help set the scene ahead of this week’s Jackson Hole Economic Symposium.

Agenda 9:30am GMT: The latest business ONS insights and their impact on the UK economy, 1.30pm GMT: US Q2 GDP report (second estimate) 1.30pm GMT: US weekly unemployment figures.

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