Thames Valley: Lloyds Bank PMI report finds record business activity growth in private sector firms

The latest Purchasing Managers’ Index (PMI) data from Lloyds Bank Commercial Banking has signalled the sharpest growth in South East private sector business activity, new orders and backlogs since data collection began in January 1997. Anecdotal evidence indicated that the respective expansions were driven by increases in both domestic and foreign demand.

Output and demand

The headline Lloyds Bank Commercial Banking South East Business Activity Index – a seasonally-adjusted index that measures the combined output of the region’s manufacturing and service sectors – increased further to 63.3 in November, up from 61.9 in October. The rate of growth accelerated for the second month running, to the sharpest since the series began in January 1997. The latest increase was attributed by respondents to higher domestic and foreign demand as well as a rise in the number of projects undertaken.

New order growth also registered a series high in November, having accelerated for the second consecutive month. Panellists cited new projects and increased demand from Ireland, the Asia-Pacific region and the US as key factors behind higher order intakes.

Employment and backlogs

In line with the trends in output and new orders, backlogs of work expanded at the sharpest rate on record in November. Conducting previously outsourced work in-house, production challenges and increased export orders were highlighted by respondents as primary causes of the accumulation of business outstanding.

Private sector employment in the South East rose for the eighth consecutive month and at a faster rate than the UK average. Respondents partially attributed the latest rise in payroll numbers to increased demand and the introduction of new product ranges.

Input and output prices

November marked the sixteenth successive month of input price inflation, with the pace having accelerated to the fastest recorded in just over a year.

Meanwhile, output prices increased at the fastest pace since June 2011, but one that remained weaker than the UK average. While manufacturers recorded a solid increase in charges, service providers saw a marginal fall.

Commenting on the survey Paul Smart, area director SME Banking, Thames Valley, Lloyds Bank Commercial Banking, said: “Business conditions improved in the South East’s private sector by a record margin in November, and one that was substantially stronger than the national average. Fuelled by record highs in new order growth and an accumulation of backlogs of work, the expansion in business activity accelerated in November to surpass August’s recent survey record.

"Employment growth also maintained momentum but eased slightly from October’s near 16-year high. The continuation of broad-based and unprecedentedly-strong growth of both work orders and backlogs showed that business conditions should further improve over the coming months.”