Lloyds Bank

Output growth picks up in March but ends worst quarter in three years

11 April 2016

  • Output growth picks up slightly in March despite slower rise in new business

  • Wales records stronger increase in business activity than all English regions

  • Signs of inflationary pressures returning as prices rise at faster rate

Growth in output and employment was slightly higher in March compared to the month before, but the first quarter as a whole was the worst in almost three years according to the latest Lloyds Bank Regional Purchasing Managers’ Index® (PMI®).

The business activity index for England – which tracks changes in the combined output of manufacturing and services – registered 53.7 in March, up from February’s 34-month low of 52.9 but rounded off the worst quarter of output growth since the second quarter of 2013. Behind the recent slowdown has been a softer trend in new business, which showed the weakest increase since February 2013.

The South East was England’s fastest growing region in terms of business activity, recording an index reading of 55.1, followed by the East of England with 54.5. The North East was the only region where output marginally decreased during the month, with a reading of 49.5.

Wales maintained its outperformance of the UK as a whole, recording a stronger increase in activity than all English regions in March. At 55.4, its business activity index was at a three-month high.

UK businesses continued to take on staff during March, with job creation strongest in the East of England and London. However, the overall rate of employment growth picked up only slightly from February’s two-and-a-half year low and there were net job losses recorded in the North East and Yorkshire & Humber regions.

March saw a faster increase in prices charged for goods and services across England and Wales, the sharpest since July last year. This partly reflected a heightening of cost pressures facing businesses, with input price inflation running at an eight-month high.

Tim Hinton, Managing Director, Mid-Markets and SME Banking, Lloyds Banking Group said:

“Overall growth for the first quarter was slower than recent periods and trends, but growth nonetheless.

“Despite facing a variety of headwinds UK companies continued to secure new business and remained confident enough to take on additional staff.”

- END -

Read full release