East Anglia: Rate of growth in business actvity slowed sharply in March, says Lloyds PMI survey
13:40 14 April 2014
Business activity in the region continued to increase during March but the rate of growth slowed to a four-month low, according to the latest Lloyds Bank East of England PMI survey.
The headline seasonally adjusted Lloyds Bank East of England Business Activity Index dipped to 50.4 in March, still above the 50.0 threshold between growth and contraction but well down from February’s reading of 52.0.
Lloyds said that while output increased for the fourth successive survey period, the latest reading was the weakest in the current sequence, with the drop in overall activity growth driven by contracting output levels in the manufacturing sector.
Levels of incoming new business continued to increase in March, but the pace of expansion slowed and was below the overall UK average. Sector data suggested a solid contraction in new work at manufacturers, while volumes of incoming new orders increased at firms in the service sector.
East of England companies also continued to hire additional staff during March, but at the slowest pace in three survey periods. Companies that reported increased payroll numbers often linked this to higher new orders. Meanwhile, work-in-hand (but not yet completed) decreased for the second month running, and at the sharpest rate in four survey periods. According to anecdotal evidence, an expansion in operating capacity accounted for much of the latest decline in levels of outstanding business.
Cost burdens in the East of England continued to increase in March. Around 22% of panellists recorded higher input prices and linked this to increased fuel prices and a weak pound. However, cost inflation eased during the latest survey period, and was below the series average.
Companies in the East of England raised their output charges in March, and for the fifth consecutive month. An increase in input costs accounted for much of the latest rise, according to panellists.
Steve Elsom, area director for SME banking in East Anglia at Lloyds Bank Commercial Banking, said: “The private sector economy across the East of England weakened significantly in terms of activity and new orders in March.
“The labour market remained subdued, in line with the trend of moderating growth, with the weakest increase in employment levels for three months. Despite this, while input and output price inflation persisted both were weaker than in the previous month.”