UK business activity weakened sharply in June, with BDO’s Output Index falling to 91.53 from 94.80 in May.
Manufacturing softened to 95.39 as earlier stockpiling and frontloaded orders across the second quarter began to unwind.
Subdued confidence, higher costs and weaker consumer demand point to cautious sourcing, investment and hiring decisions.
The decline reflected weaker activity across both services and manufacturing, signalling a broader slowdown for companies selling into the UK market.
BDO’s Services Output Index fell to 91.04, while the manufacturing reading dropped to 95.39 from 99.31 in May, as the support from precautionary stockpiling and frontloaded orders across the second quarter began to unwind.
Weak consumer demand, subdued business confidence and rising cost pressures combined to slow activity. Its Optimism Index remained below the 95-point threshold that separates growth from contraction for 20 consecutive months, while BDO’s Inflation Index rose to 102.70, its highest level in more than three years.
The higher operating costs and rising household energy bills from July onwards are likely to affect discretionary spending, while geopolitical uncertainty is expected to weigh on business spending, investment plans and confidence.
The Employment Index, which combines hiring intentions, headcount and labour demand, held broadly steady at 93.08, remaining just above the previous month’s 15-year low.
Scott Knight, head of growth at BDO said: “Business confidence has remained low for 20 consecutive months as businesses are trapped in survival mode. Rebuilding confidence will need to be tackled immediately by the next Prime Minister if the UK is to return to growth.”
Until confidence recovers, BDO expects both output and employment indicators to remain subdued, pointing to continued caution for suppliers, manufacturers and retail sourcing teams exposed to UK demand.
Fibre2Fashion News Desk
