Testing times for region's businesses as output stagnates

Output stagnated across the East of England in December 2020 while costs rose

Output flatlined across the East of England in December. PIC RICHARD SNASDELL - Credit: Richard Snasdell

Output stagnated across the East of England in December as the country braced itself for another testing period, figures show.

But the region was one of only two to bolster its private sector workforce in December, the latest NatWest East of England Business Activity Index shows.

The index measures performance across the manufacturing and service sectors, with 50 indicating a balance of positive and negative responses from its panellists.

It revealed seasonally-adjusted month-on-month output across the east's manufacturing and service fell from 51.2 to 50.1 in December with survey respondents attributing the stagnation to tighter coronavirus restrictions.

But there was a marginal rise in new business, with manufacturers registering the sharper increase. And there was some optimism about output in the year ahead, with an improvement in output expectations.

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The Future Outlook Index climbed for the second month in a row to reach its highest level since August as vaccine rollouts, business expansions and new product launches fuelled optimism in December.

But overall, sentiment in the region was more subdued than in other parts of the UK.

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On the plus side, nine consecutive months of jobs shedding across private firms in the east was replaced with slight growth as greater demand prompted an uplift. And at the UK level  the East of England alongside Yorkshire & Humber were the only regions to register growth in payroll numbers across the 12 regions monitored.

But more work across the region was incomplete as anecdotally firms endured problems with obtaining materials due to shortages and greater demand.

The region's businesses also faced a substantial increase in cost pressures, the survey found, with price inflation rates well above the UK average. Manufacturers took the biggest hit and blamed material shortages and higher transport costs. Prices charged for goods and services also went up across the region.

John Maude - who sits on the NatWest Midlands & East Regional Board - said: “December data highlighted a sombre end to 2020, with output broadly stagnating in the East of England. The continuation of virus-related restrictions weighed on business activity, growth of which ground to a halt.

"There were some positives however, with demand conditions improving following new client wins, while vaccine rollouts and business expansion plans fuelled greater optimism surrounding output in 2021.

"Nevertheless, private sector firms in the East of England will gear up for another testing period as the nation enters a third lockdown. The new EU rules will also pose some challenges, although firms are likely to have welcomed the news of a deal between the UK and the EU."

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