Business Activity Rises in All English Regions During September

Key points:

  1. Output in all nine English regions rebounds after a slowdown in August
  2. The East Midlands and London see the fastest rises in business activity
  3. Inflationary pressures continue to ease in September

Today’s release of Lloyds TSB regional Purchasing Managers’ Index® (PMI®) data points to an encouraging rebound in business activity across the English regions during September. The improvement in business activity followed a marked slowdown in August, when all regions except London saw their weakest performances for around two years. The latest data also indicated higher levels of new business across the English regions, but employment trends remained subdued outside of the East Midlands and West Midlands. Input cost inflation meanwhile remained relatively strong, albeit still lower than the peaks seen at the beginning of the year.


Commenting on the Lloyds TSB Regional PMIs, John Maltby, group director, Lloyds TSB Commercial, said:

“September’s survey shows a return to growth for the English regions after the synchronised slowdown seen in August. The latest improvements in business activity were nonetheless weaker than those seen at the start of the year, largely reflecting a less favourable global economic backdrop and strained business confidence in the wake of the euro area sovereign debt crisis. This in turn has contributed to lower regional private sector employment trends in recent months, although the Midlands remains a notable outperformer on the jobs front.”

“Cost pressures continued to ease in most regions during September, especially at manufacturing companies, which helped bring input price inflation further below the peaks recorded at the beginning of 2011. There were also signs that this has started to filter through to lower price inflation for end consumers, as manufacturers and service providers in the majority of regions reported lower trends in their average charges during September.”

Output and demand

Higher levels of business activity were recorded in all nine English regions during September, led by solid rises in the East Midlands and London. These two regions were also the fastest growing regions for the third quarter as a whole. Meanwhile, the East of England was the weakest performing region in September. On average for the third quarter of the year, the slowest rise in private sector business activity was in the South West.

September pointed to divergent trends in new business intakes across the English regions. London and the West Midlands posted robust and accelerated rises in new work, while the North West, Yorkshire & Humber and East of England saw only slight increases in new business. The latest expansion of new business volumes in the North West was the slowest in almost two-and-a-half years of continuous growth.

Employment and backlogs

Private sector job creation was recorded in seven of the nine English regions during September. The North West and Yorkshire & Humber posted reduced employment levels. The East Midlands and West Midlands saw the strongest rises in workforce numbers. Meanwhile, latest data showed a return to jobs growth in London, the South East and the South West, although the rate of expansion in each case was only marginal.

Backlogs of work declined in seven of the nine English regions in September, suggesting a general lack of pressure on operating capacity at private sector companies. Increased levels of unfinished work in London and the North East contrasted with sharp falls in the North West and the South West.

Input and output prices

All nine English regions recorded robust rises in their average cost burdens during the latest survey period, but the pace of inflation was well below the highs seen in early-2011. The steepest rate of input price inflation was in the South West, and the slowest remained in London.

In line with the trend for input costs, South West companies registered the steepest regional rate of output charge inflation during September. Solid increases in average tariffs were also seen in the West Midlands, North West and North East. Meanwhile, firms in London and the South East pointed to price discounting in September. Although the reductions in prices charged were only marginal, in both regions they were still the most marked for around two years.

PMI Business Activity (Output) Index Heat map, September 2011

PMI Business Activity (Output) Index

Heat map, September 2011

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.

Darker colours show faster growth in business activity.

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