South East: Region records record growth in employment, Lloyds survey shows

Business activity in the South East continued to improve in June, with the pace of growth in line with the UK average. New business rose at a marked pace, and one that was faster than in the previous month. Notably, employment rose at the fastest rate in the series history, with job creation above the UK average for the third month running. Cost pressures edged lower and remained below the survey’s long-run average.

Output and demand

June saw a continued rise in business activity, as highlighted by the Lloyds Bank South East Business Activity Index - a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors - registering at 58.0 in June. Although business activity growth eased from May (60.8), the pace of expansion was the same as the UK average and above the long-run trend of 55.0. Both manufacturers and service providers posted sharp increases in output in the latest period.

Growth of new business supported the latest rise in total activity. The rate of expansion in new work accelerated for the second month running and was the strongest recorded since December 2013.

Employment and backlogs

Backlogs of work in the South East rose for the 12th month running in June, the longest sequence of growth in the series to date. The rate of increase eased slightly from May’s strong pace, however.

The volume of incomplete work rose despite further strong workforce growth in June. The rate of job creation in the South East accelerated further and was the fastest recorded in the series history. Employment rose sharply in both the service and manufacturing sectors.

Input and output prices

Input prices rose in June, which some panellists attributed to higher raw material prices. However the rate of inflation was below the UK average for the second month running. According to the sector data, services firms saw a sharp rise in input prices, while manufacturers saw only a slight increase.

Selling prices rose for the 14th month in succession in June. That said, the rate of output inflation was only modest.

Commenting on the survey, Ian Patterson, area director SME Banking in the South East, Lloyds Bank Commercial Banking, said: “Private sector output and new business both continued to rise strongly across the South East in June. This led to the strongest increase in employment in the series-history in the region. Despite the rise in employment there was strong growth in volumes of outstanding business in June, boding well for the prospects of job creation being sustained in coming months.”