SW private sector output continues to rise

PMI® survey data signalled a strengthening upturn in the South West private sector economy in January, following a weaker phase of expansion during the fourth quarter of 2014.

Output, new business, backlogs and employment all rose at faster rates than seen in December. Meanwhile, inflationary pressures eased sharply, with both input and output prices rising only marginally.   

The seasonally adjusted Lloyds Bank Commercial Banking South West Business Activity Index rose solidly in January to 58.0, from 55.0, indicating a strong rise in business activity in the South West private sector.

The rate of growth signalled by the latest reading was the fastest since June. Previously, the Index averaged 54.3 in the final three months of 2014, the weakest quarterly trend since Q2 2013. Business activity has risen for 22 consecutive months, and the latest expansion was in line with the robust trend pace observed over this period.

Data broken down by broad sector signalled that both manufacturing and services registered stronger gains in output in January. The goods-producing sector continued to record the faster rate of expansion.

Stronger new business growth supported output in January. The rate of growth remained sharper than the long-run survey average, but was weaker than the trend shown over the current 22-month sequence of expansion.

Survey data signalled growing pressure on capacity in January, with backlogs rising for the fifth month running and at a faster pace. The South West registered a stronger increase in outstanding business than all other UK regions except London. This was despite a stronger rise in employment during the month. 

Private sector firms’ cost pressures weakened sharply in January. Average input prices rose only marginally, and at one of the slowest rates in the past six years. Weaker cost pressures were reflected in a similarly marginal rise in prices charged for goods and services.

Commenting on the Lloyds Bank Commercial Banking South West PMI survey, David Beaumont, area director for SME banking in the South West, Lloyds Bank Commercial Banking, said: “The South West registered a positive start to 2015, with stronger rates of growth signalled across output, new business, backlogs and employment.

"Of these, backlogs registered a faster increase than all other UK regions except London, which bodes well for sustained expansion in the coming months. Total output rose at the fastest rate in seven months while the latest survey indicated only marginal increases in firms’ input costs and their charges, which should boost consumer demand.”