East’s recovery slows amid new virus onslaught, survey finds

Manufacturing at Spectra's plastic bottle making factory at Halesworth before the coronavirus lockdo

Business confidence in the East of England is below the national average - Credit: Spectra Packaging

Growth has softened and confidence remains battered among East of England firms as the course of the pandemic takes its toll, latest figures suggest.

NatWest’s East of England PMI (Purchasing Managers’ Index) Business Activity Index showed month-on-month output across the region’s manufacturing and service sectors fell sharply from 54.7 in November to 51.6 in December.

Anything above 50 in the seasonally-adjusted survey shows businesses still in positive territory while 50 represents no change, but the marginal uptick was the slowest in 10 months and showed a softening of growth for the second successive month among those businesses surveyed, said NatWest.

This was due in part to the resurgence of the pandemic, leading to new business placed with companies in the East in December rising at its slowest pace over a 10-month-long period of expansion. 

Confidence among East firms is still lower than the UK average, the PMI figures show – but was up from a 13-month low in November.

The overall rate of growth was “solid” and private sector firms in the region are still positive about higher activity levels in 2022, said NatWest.

The growth in confidence was down to hopes of a return to normality, new product launches and machinery upgrades underpinned optimism during the month, it added.

The East also saw staffing levels rise substantially in December – as it recorded the joint second strongest increase in employment alongside the East Midlands. The two regions were second only to London, said NatWest.

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Outstanding work rose marginally in the region, but companies were still plagued by material shortages, the survey found. It was the 19th month in a row that private sector firms in the East of England registered a rise in operating expenses during December, and it was the third-steepest in the survey’s history, surpassed only by those seen in the previous two months. 

Wages, transportation, materials and energy were all cited as behind the cost inflation. As a result, both manufacturers and service providers raised their prices.

John Maude, who sits on the NatWest Midlands & East Regional Board, said the survey results partly reflected the emergence of the Omicron varian the reintroduction of some virus-related restrictions weighed slightlt, asy on consumer demand.

“Nevertheless, firms were optimistic that the effects of the pandemic will subside over the course of the new year. As such, there were stronger increases in head counts with firms remaining committed to building their workforces,” he said.

“As for prices, intense inflationary pressures continued, often reflecting higher material, wage and fuel costs. Firms often passed through higher expenses amid efforts to protect profit margins, leading to a record rise in average prices charged for goods and services.”
 

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