Regional PMI March - private sector growth accelerates at end of first quarter

13 April 2015

  • Fastest activity growth recorded across England and Wales for seven months
  • London remains best performing region
  • Increases in new orders and accumulation of outstanding work bodes well for growth outlook
  • Employment rises across England, with a record increase in job creation seen in Yorkshire & Humber
  • Business activity growth recorded for twenty-ninth successive month and above 2014 average

Private sector growth across England and Wales moved up a gear at the end of the first quarter of 2015, according to the latest Lloyds Bank Regional Purchasing Managers’ Index® (PMI®). Faster increases in both new business orders and backlogs of outstanding work offered a boost to growth prospects for the months ahead.

However, businesses’ average costs and the sale price of their finished goods remained largely stagnant, highlighting a continued lack of inflationary pressure in the broader economy.

Business activity in England increased at the fastest rate for seven months in March, rising to 59.0 from 56.9 in February. The index was also greater than its average for 2014 (58.3) and above the 50.0 ‘no-change’ mark that divides growth from contraction for the twenty-ninth successive month.

The increase in business activity in March was broad-based across the English regions, led by London (61.8) where growth hit an 11-month high. Strong growth was also evident in the West Midlands (61.2), Yorkshire & Humber (59.5) and the South East (59.2), with rates of expansion having accelerated in each case. The East of England saw the slowest rate of growth, slipping to a 22-month low (54.8).

Wales recorded its best growth in business activity since July 2014, rising from 56.9 in February to 59.8 last month, highlighting the sharp pace of economic expansion.

A strong increase in new business orders in March, and the fastest accumulation of outstanding work in six months, bode well for the prospect of momentum being sustained into the second quarter of the year.
Employment rose across all regions of England and Wales led by Yorkshire & Humber (58.6), which saw the fastest rise in employment since records began in 1997.

Cost inflation among private sector businesses remained relatively flat in March, as higher input prices at services firms were partly offset by falling manufacturing costs. Output prices meanwhile held broadly steady on average.

Numbers relate to monthly seasonally adjusted diffusion indexes. An index reading above 50 signals an increase on the previous month. A reading below 50 signals a decline. The greater the divergence from 50, the greater the rate of change indicated.

Tim Hinton, Managing Director, Mid Markets and SME Banking, Lloyds Banking Group said: “The upturn in growth seen last month will provide welcome encouragement to UK businesses, and demonstrates that economic activity is proving resilient. Stronger increases in new business point to the economy retaining momentum, as firms bolster workforces in order to keep on top of workloads. Higher employment coupled with low inflationary pressures is likely to support demand in the months ahead.”

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