South East: Growth continues, but at slower rate

Business activity growth in the South East lost momentum in July, according to the latest Lloyds Bank Regional Purchasing Managers Index (PMI).

The South East PMI registered 54.1 in July, falling from 55.7 in June. A reading greater than 50.0 signifies growth in business activity, whereas a reading below signals contraction.

The Lloyds Bank PMI, or purchasing managers’ index, is the leading economic health-check of UK regions. It is based on responses from manufacturers and service providers about the volume of goods and services produced during July compared with a month earlier.

New business orders increased for the 12th month running, but at a slower pace than seen on average during the second quarter. This greater level of activity fuelled a rise in private sector jobs as companies increased capacity to keep pace with demand.

Input cost pressures for firms rose to a three-month high, with cost burdens partly passed onto customers through higher prices charged for goods and services.

Phil Kirk, regional director for the South East at Lloyds Bank Commercial Banking, said: “The South East economy lost some impetus at the start of the second half of the year, but there are strong signs that activity growth can be sustained. Output growth is in line with the UK overall and July saw a further uptick in new orders, but at a slower rate.

“The weak pound continues to affect companies’ margins and so customers are having to face higher prices for goods and services. This is likely to be the case until the end of the year at least.”