Weak pound and higher salaries put pressure on margins the East of England during August

Steve Elsom of Lloyds Bank.
Picture: Bernard Pound

Steve Elsom of Lloyds Bank. Picture: Bernard Pound - Credit: Archant

Businesses in the East of England enjoyed a solid month of sales growth during August but margins came under further pressure, according to the latest Lloyds Bank Regional Purchasing Managers’ Index (PMI).

The East of England PMI registered 54.5 in August, down marginally from 54.6 in July but slightly faster than the UK average of 54.0. Any PMI reading above 50 signifies growth in business activity.

Data from August showed that the amount of new orders received by firms increased, although overall growth eased slightly when compared with the previous month. Employment also rose to keep up with demand and rising workloads among firms.

However, the weak pound and salary increases continued to put pressure on firms. This caused firms to pass on some of their cost burden to customers by rasing selling prices for goods and services.

The index is based on responses from manufacturers and services businesses about the volume of goods and services produced compared with a month earlier.

Steve Elsom, regional director for SME banking in the East of England at Lloyds Bank Commercial Banking, said: “The East of England continued its growth momentum in August, supported by strong growth in new business.

“However, firms’ margins were under pressure due to currency weakness, and in some cases, higher staff costs.

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“On a more positive note, August’s data pointed to a healthy labour market in the region, with the pace of job creation the strongest since September, 2016.”