South East: Robust output and new order growth sustained, reports Lloyds Bank

The headline Lloyds Bank South East Business Activity Index - a seasonally adjusted index that tracks changes in the combined output of the region’s manufacturing and service sectors - posted at 60.7 in July. This was up from 58.0 in June, and signalled a sharp expansion of output in the South East private sector economy.

Furthermore, it was the third strongest output growth across all UK regions behind the North East and the East Midlands in the latest period.
Sector data indicated that business activity growth was broad-based across both the manufacturing and service sectors in the region.

Growth was supported by an expansion of total new business placed at South East private sector firms. According to anecdotal evidence, a general improvement in demand conditions and stronger confidence in the economy boosted sales over the month.

Employment and backlogs

Staffing levels in the South East increased sharply during July, amid reports of company expansion plans. Although the rate of growth in payroll numbers ticked down slightly from June’s survey record, the pace was above both the long-run series trend and the UK average.

Despite the net increase in employment, backlogs of work continued to grow during July. Moreover, the rate of accumulation quickened to a solid pace.

Input and output prices

Cost burdens at private sector firms in the South East increased again during July. However, the rate of input price inflation remained below the UK average for the third month running.

In contrast, private sector companies in the region decreased their selling prices during July, although at a fractional pace.

Commenting on the Lloyds Bank Commercial Banking South East PMI survey, Ian Patterson, area director SME banking in the South East, Lloyds Bank Commercial Banking, said: “The South East’s private sector economy expanded at a robust rate with business activity and new order levels both rising sharply during July. Output growth in the region was faster than the UK as a whole and the third-strongest across all regions. Improving confidence with regards to the economic outlook and planned future expansion led to continued job creation.”