Last month saw further increases in activity and new orders at companies in the East of England, although the rates of growth eased compared with April, according to a report out today.

Workforce numbers continued to rise sharply while the rate of input cost inflation eased to an eight-month low, the latest Lloyds Bank Commercial Banking East of England PMI study shows.

The overall Lloyds Bank East of England Business Activity Index, a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors, again posted well above the neutral 50.0 threshold.

Although down slightly from April’s 59.9, at 58.6, the latest reading still indicates robust output growth, with Lloyds reporting anecdotal evidence that a rise in order intakes and increased construction sector demand were the main drivers behind the latest expansion.

New orders also rose at a slower pace in May, with the latest increase the weakest in nearly a year. The rate of growth in new work was nevertheless strong overall and well above the long-run series average, with some survey participants attributingd increased new business to improved consumer confidence.

The latest survey data signalled a further rise in employment at companies in the region, with the rate of job creation down only fractionally from April’s record high. More than one-in-five surveyed companies hired additional workers, while only 6% shed staff.

Meanwhile, backlogs of work were depleted for a second straight month during May, signalling ongoing spare capacity in the East of England private sector. However, the rate at which work outstanding fell eased since April and was only marginal overall.

Average cost burdens increased further during May, but the rate of cost inflation eased to an eight-month low. Where companies signalled rising input prices, they linked this to increased raw material prices and higher staff costs.

Output prices rose at a faster pace than in April, with sector data suggesting that manufacturers and service providers both raised their charges.

Steve Elsom, area director for SME banking in the East of England at Lloyds Bank Commercial Banking, said: “May’s survey results provide further encouraging news about the health of the private sector across the East of England.

“Business activity and new orders rose strongly during May and companies continued to take on additional workers in order to meet higher demand. This indicates that companies are likely to remain in expansion mode in the coming months.”

The East of England PMI features original survey data collected in May 2014 from a representative panel of companies based in the region and operating in both manufacturing and service sectors.

The survey forms part of a series of regional surveys published by Markit Economics and is derived from the highly regarded national PMI surveys produced by Markit for the Chartered Institute of Purchasing and Supply.