Data gathered by the business experts at Forbes Advisor, the price comparison and financial guidance platform, reveals that over a quarter (27%) of businesses trading in the UK reported lower turnover in August 2023 compared with July 2023.
The Accommodation and Food Services sector was the hardest hit in August 2023 as far as month on month (MoM) turnover is concerned. Overall, more than two in five (41%) businesses in this area reported a sharp decline in turnover compared to July 2023.
The Transportation and Storage sector also suffered a significant downturn in its income of nearly a third (32%). The Education and Wholesale and Retail sectors both experienced a reduction in turnover of almost one third (30%).
Looking ahead, findings revealed that over one in six (16%) UK businesses are bracing themselves for downturns in October. The Accommodation and Food Service sector is expecting turnover to decrease by more than one third (37%).
The Transportation and Storage sector adds to this, with almost one in five (19%) businesses foreseeing a financial challenge in October 2023.
Regarding the reasons for the expected setbacks, the report shows that more than a fifth of businesses (22%) pinpointed potential input price hikes as the primary cause for any reduction in turnover. The cost of raw material prices is another contributing factor, cited by nearly one in five businesses (19%), while a similar number (18%) attributed impending losses to rising labour costs.
Year-on-ear comparison of turnover
The year-on-year data (YoY) shows a slight increase in businesses with reduced turnover, with 27% experiencing a decline this year, compared to 26% in August 2022.
Among specific sectors, the Administrative and Support Services sector saw the biggest increase in businesses with a reduced turnover, 26% in August this year, compared to just 16% in the previous year.
The Transportation and Storage sector also saw more businesses with lower gross revenue, with nearly a third (32%) this year, up from last year’s 28%.
Despite monthly challenges in the Accommodation and Food Services industry, and the highest overall number of businesses suffering a reduction in turnover, the industry was one of the few which actually had a positive annual trend, with 41% reporting a fall in income this year, down from 43% in August 2022.
UK regions reporting lowest turnover in August 2023
Further analysis of the data revealed the UK regions affected by a decline in business turnover in August 2023. The South East of England faced the largest proportion of businesses reporting losses, with more than a quarter (27%) reporting a decline.
This was closely followed by the West Midlands (26%) and the North West (26%).
Northern Ireland reported the smallest percentage of businesses facing a decline in turnover (17%).
Kevin Pratt, business commentator at Forbes Advisor, said,“Businesses across many sectors are battling high costs for raw materials, energy and transport, supply chain shortages and bottlenecks, and increased wage bills. It’s hardly surprising that we’ve seen a rise in the number of businesses reporting falling turnover in August.
“There are glimmers of hope but the overall outlook is gloomy. The recent announcement of a fall in inflation is welcome, but businesses are braced for further increases in input costs this autumn because of the uptick in oil prices, which started in August, continued at pace in September and is persisting as we move into October.
“Petrol and diesel are edging closer to £1.60 a litre than the £1.48 recorded by the ONS in August. This will only further add to business costs.”