SW private sector output continues to rise
Private sector output in the South West of England continued to rise at a strong rate in December, according to PMI® survey data.
Growth was supported by higher new business volumes and the level of incomplete work continued to rise, despite a further robust round of job creation. That said, the rate of growth in new orders eased to the slowest in 19 months. In line with the broad UK trend, inflationary pressures remained relatively muted.
The seasonally adjusted Lloyds Bank Commercial Banking South West Business Activity Index signalled a further strong rise in private sector output at the end of 2014.
The Index was little-changed from November’s 55.3, at 55.0, broadly in line with the figure for the UK as a whole and indicative of a sharp rate of expansion.
Activity has now risen for 21 consecutive months. That said, on a quarterly basis the rate of growth in Q4 was the slowest since Q2 2013.
Data broken down by broad sector signalled that manufacturing output continued to rise at a faster pace than services activity in December, as has been the case since August.
The volume of new business received by private sector firms in the South West rose for the twenty-first successive month in December. The rate of growth remained solid overall, but was slower than the UK average and the weakest registered since May 2013.
December data indicated a further strong increase in private sector employment in the South West, extending the current sequence of growth to 21 months. Both manufacturers and service providers reported robust workforce growth in the final month of 2014.
Backlogs of work rose for the sixteenth time in the past year-and-a-half in December, despite a slight decline in the manufacturing sector.
Input price inflation edged up to a five-month high in December, but remained weak in the context of historic survey data. Sector data indicated that cost pressures remained stronger at service providers than manufacturers, linked to salaries. In contrast, prices charged for services were unchanged, while factory gate prices rose at a robust pace.
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: “Having experienced a blip in October, private sector output growth in the South West stabilised at November’s solid pace in the final month of 2014. However, the early part of 2015 looks challenging as new business levels rose at the slowest rate in over a year-and-a-half in December.”
