South East: Rising input costs offset by increased demand

Businesses in the South East saw a strong rise in business activity but also faced one of the highest rises in costs since the recession in February, according to the latest Lloyds Bank UK Regional PMI survey.

Rising demand for goods and services fuelled growth, with the South East PMI registering 55.9 in February, up from 55.3 in January. A reading above 50 signifies expansion in business activity.

Increasing raw material costs, worsened by a weak pound, led to a steep rise in average prices charged for goods and services in February. Average prices rose at the highest rate since August 2008.

Strong new business pipelines, however, meant South East firms were optimistic about growth prospects, recording the third-highest confidence of any region across the UK.

The Lloyds Bank PMI, or purchasing managers’ index, is the leading economic health-check of UK regions. It is based on responses from manufacturers and service providers about the volume of goods and services produced during February compared with a month earlier.

Phillip Kirk, regional director for the South East at Lloyds Bank Commercial Banking, said: “The South East saw an uplift in business growth, one of just a handful of regions, with underlying demand for goods and services providing a boost.

“This drive in new business has helped offset the steep rise in input costs and contributed to high levels of optimism, which is a positive sign for future growth.”