Lloyds Bank

Lloyds TSB England and Wales Regional PMI

12 August 2013

English regions witness strongest growth on record; welsh business activity

increases at fastest pace for almost four years

  • English regions record strongest business growth in at least 12 years
  • Wales posts sharpest rise in activity for almost four years
  • North West leads rise in employment seen across all of England and Wales
  • Growth fuelled by higher levels of new business in all English regions and Wales

English and Welsh businesses recorded a strong upturn in business activity during July, building on the solid recovery that was reported during June, according to the latest Lloyds TSB Regional Purchasing Managers’ Index® (PMI®) survey.

The headline index measuring overall business activity across the English regions rose to 60.0 in July, signalling the strongest growth since the series began in January 2001. This was also a significant rise compared to last month’s index reading of 55.9. Furthermore, the index has now posted above the 50.0 ‘no-change’ value in each of the past nine months, indicating a sustained improvement in business conditions across the English regions.

In Wales, the headline index measuring overall business activity posted 57.6 in July, up from 56.7 in June and above the 50.0 no-change value for the twelfth month running. The latest reading indicated the fastest rise in business activity since February 2010.

July’s data signalled that the rate of growth for English businesses was fastest in the North West (62.3), followed by London (61.8). Of the nine English regions, companies operating in the North East saw the least marked increase in business activity (56.4), but the rate of growth in that region still hit a 28-month high.

Survey respondents widely attributed the increase in output during July to higher levels of domestic business and consumer spending, alongside signs of an improvement in export market conditions. Growth of incoming new work was recorded in Wales (56.7) and all nine English regions, led by the North West (63.0) and the South East (61.1).

Faster increases in new work contributed to an accumulation of unfinished business in the majority of English regions. London posted the sharpest rise in unfinished work (53.4), with the latest increase being the steepest rise since April 2006. This in turn supported employment in July and, for the first time since October 2011, all nine English regions registered an expansion of private sector staffing levels. Job creation was strongest in the North West (55.4), followed by the West Midlands (54.9). In Wales, backlogs of work fell in July (47.8), while employment growth reached its highest level for seven years (53.2).

Input price inflation accelerated in eight of the nine English regions, with the South East the exception. However, each of the latest increases in average cost burdens were slower than their long-run trends, thereby highlighting relatively subdued price pressures. In Wales, cost inflation was broadly unchanged since June. Meanwhile, price increases by private sector companies in Wales and the English regions were only marginal in July, with some firms suggesting that strong competition for new work and efforts to gain new clients had constrained prices in the latest survey period.

David Oldfield, Managing Director, SME & Mid Markets Banking, Lloyds Banking Group, said:
“Private sector business activity across the English regions in July was the strongest on record, and Wales also saw the sharpest rise in activity for almost four years. This superb result for businesses should help to bolster confidence in the economy both at home and abroad.

“These findings suggest that the upturn in economic growth seen through the summer has strengthened right across England and Wales, and the strong rise in levels of new work also hints that this momentum should continue through the third quarter of the year.

“Most importantly, all regions across England and in Wales have seen a return to job creation, as companies look to meet greater business requirements and confidence increases in the wider economic outlook.”

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