Growth in business activity in East at 22-month low, says Lloyds Bank PMI report

Steve Elsom of Lloyds Bank Commercial Banking.

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

Business activity in the East of England continued to grow during March but the rate of improvement was the slowest for nearly two years, according to Lloyds Bank’s latest regional Purchase Managers Index (PMI) survey.

Output, new orders and employment all improved but the overall Lloyds Bank East of England Business Activity Index, in which any figure above 50 represents growth, fell from 55.9 in February to a 22-month low of 54.8 last month.

Lloyds said that while the latest reading was still “consistent with a robust pace of expansion”, it was weaker than both the English average of 59.0 and the UK average of 58.8.

Incoming new work in the region rose further in March, amid reports of stronger demand, new business wins and improved market conditions. The pace of growth accelerated over the month, and the improvement was broad-based with increases signalled both by manufacturers and service providers.

Pressures on operating capacity were signalled as backlogs of work increased in March. The rise in unfinished business was, however, moderate and weaker than that seen at the UK level.

Jobs growth in the East of England private sector economy eased to the weakest since last August but the rate of expansion in workforce numbers remained strong and in line with the UK average. Growth was seen at services firms and goods producers.

For the 71st month running, input costs rose in March. The rate of inflation accelerated to the quickest so far this year, but was well below the long-run average. There was a divergence at sub-sector level, with increases signalled by services firms but reductions reported by manufacturers.

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However, selling prices in the East of England fell in March, ending a 20-month sequence of charge inflation. The rate of reduction was, however, only fractional, with higher selling prices in the service sector being offset by discounting offered by manufacturers. At the UK level, output prices were unchanged over the month.

Steve Elsom, area director for SME Banking in the East of England at Lloyds Bank Commercial Banking, said: “Business conditions in the East of England continued to improve at the end of the first quarter of the year, but output growth lost momentum in March, possibly due to uncertainty arising from the upcoming election.

“With incoming new work rising at an accelerated pace, it is likely that the growth slowdown may be short-lived as we move into the second quarter of 2015.”