THE East of England’s economy is improving at a faster rate than the UK average, with a sharp rise in new orders and more jobs created in June, according to a report.

The region enjoyed the fastest rise in output for six-and-a-half years, with employment on the increase for the fourth month running, the East of England Purchasing Managers’ Indexes (PMI) report found. The study, based on monthly surveys of carefully selected companies and supported by England’s regional development agencies, showed a marked improvement in operating conditions in the region’s economy. Business activity, new orders and employment all increased at steeper rates over the month, and in each case more quickly than the UK economy average.

The headline seasonally adjusted Business Activity Index, which measures the combined output of the region’s manufacturing and service sectors, was 58.5 in June, compared to 58.0 in May which indicates that business activity increased for the fourteenth consecutive month. The rate of expansion was the second-fastest in the series’ history, and the steepest since December 2003. Panellists indicated that activity growth mainly reflected a steep increase in new business.

New orders rose at the joint-second fastest pace in the history of the survey, slower only than the series’ record posted in March 2004. According to respondents, new orders had expanded from both domestic and external markets, with new business rising strongly across both manufacturing and services.

A combination of rising new business and delays from suppliers resulted in a second successive monthly accumulation of backlogs of work. The slight increase in the East of England was in contrast to the UK as a whole, which posted a reduction in outstanding business.

Higher workloads led companies to take on more staff in June, extending the current sequence of job creation to four months. The increase in employment was driven by the manufacturing sector, while staffing levels in the service sector were broadly unchanged. Although the slowest in the year-to-date, the rate of input cost inflation signalled in June was still substantial with higher raw material costs the main factor behind the rise.