South East: Strongest rise in activity for four months, says Lloyds Bank

Private sector companies in the South East reported a further solid rise in output in March, as new orders continued to grow at a marked pace. Meanwhile, employment levels continued to expand and pressure on operating capacity persisted, as backlogs of work rose further. The rate of cost inflation slowed while companies left their charges largely unchanged.

March data signalled a continuation of output growth in the South East private sector, with the headline Lloyds Bank South East Business Activity Index – a seasonally adjusted index that tracks changes in the combined output of the region’s manufacturing and service sectors – remaining comfortably above the 50.0 no-change mark.

At 59.2 in March, up from 57.3 in February, the index reached a four-month high and signalled an acceleration in the rate of activity growth in the region. Furthermore, the expansion was broad-based by sector, with manufacturers and service providers both reporting expansions.

The amount of new business placed with private sector companies in the South East also increased sharply in March, with the rate of expansion the most marked since last November.  Anecdotal evidence partly linked the rise to improved demand from new and existing clients.

Private sector firms in the South East continued to add to their payrolls in March. The rate of job creation slowed since February, but remained above the survey’s average. Employment levels have now increased continuously for two years.

Meanwhile, companies signalled ongoing pressure on operating capacity in March, as backlogs of work accumulated for the 21st successive month.

The latest survey data signalled a further rise in input costs in the South East private sector. The rate of inflation slowed since February and was below the long-run series trend. Despite an increase in input costs, companies left their charges largely unchanged in March.

Commenting on the Lloyds Bank Commercial Banking South East PMI survey, Mark Handscomb, area director for SME banking in South Central England, Lloyds Bank Commercial Banking, said: “The private sector economy across the South East powered ahead at the end of the first quarter of the year, with activity and new orders both rising strongly. A marked accumulation of backlogs of work led companies to continue adding to their workforce numbers, suggesting that output is likely to expand further in the coming months.”