South East: Recovery loses momentum

The South East PMI report, conducted by Markit on behalf of the South East England Development Agency (SEEDA), signalled a further improvement in business conditions in July, albeit at a slower pace.

Total business activity rose for the thirteenth successive month in July, with the Business Activity Index posting 54.6. The rate of expansion was solid overall and slightly faster than the UK-wide trend, but moderated since June.

Overall, growth was the slowest in 10 months and slightly weaker than the long-run average.

Sector data indicated that manufacturing continued to register a sharper rate of output expansion than services. This reflected relatively strong growth of manufacturing new orders compared to services new business. Overall, new workloads rose at the slowest rate since September 2009.

Private sector employment in the South East rose for the fourth successive month in July. The rate of job creation eased from June’s twenty-seven month high, but was nevertheless greater than the long-run series average.

Moreover, workforce growth was evident in both the manufacturing and service sectors.

Recruitment helped firms control workloads in July. The volume of outstanding business declined for the sixth month running, and at a slightly faster rate than in the previous month.

Average input prices paid by companies in the South East private sector rose for the tenth month running in July. The rate of input cost inflation eased to a seven-month low, but remained slightly above its long-run trend. Sources of rising costs included chemicals, timber, paper, metals, fuel, foodstuffs and salaries.

Survey data indicated a further rise in prices charged by private sector companies in the South East. The rate of output price inflation remained modest and eased slightly since June, reflecting an overall fall in service providers’ charges. In contrast, manufacturers’ output prices rose sharply during the month.