East Anglia: Lloyds survey reveals solid start to year with growth in output, orders and jobs

Steve Elsom of Lloyds Bank Commercial Banking.

Steve Elsom of Lloyds Bank Commercial Banking. - Credit: Archant

Companies around the region have reported further solid increases in output and new orders in January, with the rate of activity growth near last October’s record high, according to the latest Lloyds Bank East of England Business Activity Index.

The seasonally adjusted index, which measures the combined output of the region’s manufacturing and services sectors, edged higher from December’s reading of 59.7 to 59.9 last month.

The Lloyds Bank Commercial Banking East of England PMI survey, on which the index is based, shows that activity in the region has now risen for 14 consecutive months, with survey participants linking the latest expansion to improved market conditions and an increase in new business.

New orders continued to rise at a marked pace in January; although the rate of growth slowed to a four-month low, it was still one of the steepest seen in the history for the survey.

Lloyds said anecdotal evidence suggested that improving economic conditions in the UK and eurozone area, new contract wins and higher activity in the domestic construction sector had all contributed to the latest rise.

Driven by increased workloads, staffing levels also rose at a solid pace in January, with 18% of companies hiring additional workers, with the rate of job creation also one of the highest seen in the survey’s history.

Meanwhile, backlogs of work accumulated at the second-sharpest rate on record, as large inflows of new work imparted pressure on operating capacity in the East of England.

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Average cost burdens rose further at the beginning of 2014, with the rate of input price inflation hitting a 13-month high. Panellists commented on higher staff costs, increased commodity prices and general inflationary pressures.

In response to increased input costs, companies raised their charges in January, although the rate of charge inflation eased, to the weakest since October.

Steve Elsom, area director for SME banking in East Anglia at Lloyds Bank Commercial Banking, said: “The private sector across the East of England started the new year on a solid footing, with business activity and new order growth among the strongest seen in the survey history.

“An increase in new business resulted in the second-strongest rise in backlogs of work on record. Encouragingly, rising backlogs and confidence about the economic outlook led in turn to further job creation.

“The January Purchasing Managers’ Index highlights more positive news for business leaders across East Anglia, with many firms beginning the New Year with a strong sense of confidence and vigour. Business activity for the area has increased once again, continuing the steady rise in growth seen across East Anglia for the past 14 months.

“Following last year’s encouraging 1.9% overall GDP increase for the UK, it is clear that improved economic conditions have significantly boosted workloads for many East Anglian firms, with a substantial number of business leaders citing new business orders and contract wins as the driving force behind the uplift in activity.

“In turn, this has furthered recruitment, echoing the recent drop in national unemployment levels. Indeed, January’s job creation rate of 18% is one of the highest points recorded for the region in our survey’s history and demonstrates that firms are boosting their workforces in order to service higher levels of demand.

“With this is mind, it is clear that 2014 holds the potential to be another prosperous year for British businesses and it is vital that firms across East Anglia take advantage of the stronger market conditions and improved sense of confidence.

“Now is the time for firms to grow, and we encourage business leaders to explore all of the expansion opportunities available to them, and assess how to take their businesses forward as we move through the year.”