Record surge in business activity as East firms look beyond lockdown
- Credit: Matthew Usher
The rate of expansion in business activity in the East of England exploded in March amid a sharp surge in new orders, figures suggest.
NatWest’s regional PMI activity index — which is seasonally adjusted — revealed record optimism and the joint-strongest rate for new business since 2014.
Companies in the region were more upbeat than other parts of the UK, and of the 12 regions monitored, only Yorkshire and Humber showed a steeper rate of growth in new business.
With 50.0 representing a balance between negative and positive feedback, activity powered from 49.0 in February to 60.9 in March, indicating a robust improvement across the east’s manufacturing and services sectors.
It was the first return to growth in three months — and the highest in the series history (since 1997).
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Anecdotal evidence suggests there is optimism that demand will continue to recover as coronavirus restrictions ease, said NatWest.
There was also good news on the jobs front, with another marked rise in employment, with greater demand cited among employers for the workforce growth.
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Manufacturers recorded stronger growth in staffing numbers than service providers — but a shortage of inputs and materials contributed to a sharp rise in outstanding work in the region, which saw backlogs rising at a faster pace than all other regions surveyed.
Private sector firms in the East of England also faced a rise in costs for the tenth month in a row. Higher wage costs, supplier shortages and increased transportation prices were all cited. Firms also put up prices at the steepest rate since November 2017.
John Maude of NatWest Midlands and east regional board, said after a difficult start to 2021, the March PMI survey showed a substantial rebound in activity.
“New orders rose markedly following the government’s announcements of easing restrictions, in turn underpinning an improvement in business confidence to a survey-record high,” he said.
“Meanwhile, the surge in demand and expectations of greater output encouraged companies to add their workforces.
“That said, firms still struggled to complete incoming work in March, with material shortages and transportation bottlenecks often at the heart of the problem. In fact, delays in global supply chains have also led to substantial increases in expenses, with the rate of input price inflation strengthening for the second consecutive month to the highest for four years.
“Nevertheless, many firms eagerly await the next phase of the reopening in April. However, demand and output still have a long way to recover to make up the ground lost during the pandemic.”