Regional PMI - Business activity growth quickens

13 July 2015

  • Growth strengthens in all regions apart from the North East and North West
  • Rate of expansion in Wales remains among highest on record
  • Broad-based increase in employment led by East of England
  • Cost pressures increase but charges for goods and services rise more slowly

Growth of business activity increased across most English regions and Wales at the end of the second quarter, according to the latest Lloyds Bank Regional Purchasing Managers’ Index® (PMI®). The economic upturn meanwhile continued to fuel job creation, though firms’ pricing power remained subdued with charges increasing only marginally despite rising input costs.

June saw a sharp and accelerated increase in business activity in England, with the index rising to 57.5 from May’s near two-year low of 55.9. In fact, growth picked up in all regions monitored by the survey except for the North East and North West.

The fastest overall rise in activity during June was in London where growth regained almost all the momentum lost during May (index at 60.0 from 57.0). The next largest increase in output was seen in the East of England, with the index reaching a nine-month high of 59.0. The North West registered the slowest overall rate of expansion - a 26-month low of 53.4.

Wales maintained its recent run of strong growth, seeing another sharp increase in business activity in June. The index for Wales picked up slightly, rising to 58.8 from 58.6 in May and remaining above the average of the English regions.

The pace of job creation generally remained robust in June, but slowed slightly in six English regions and Wales. The strongest gain in employment was in the East of England (index at 59.1) followed by London (55.4) and Wales (55.3).

Average prices charged for goods and services across England and Wales rose only marginally and at a slower rate than May. This was despite firms’ costs having increased in England at the fastest rate for almost a year – businesses reported higher prices paid for materials as well as increased fuel and wage costs.

Tim Hinton, Managing Director, Mid Markets and SME Banking, Lloyds Banking Group said: “Businesses have seen a strong finish to the first half of the year, with the majority of regions in England and Wales seeing faster increases in business activity. The pace of job creation continues to be sustained at a high level. Despite the ongoing uncertainty in Greece and increasing raw material costs, the overall outlook for the UK remains strong.”