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Positive figures for region's economy

New business is driving an increase in the economy in the East of England ahead of the rest of the UK, according to figures released yesterday.

But inflation costs are still putting pressure on manufacturing firms as raw materials costs continue to increase, especially steel and timber.

Markit's East of England PMI report for June said the month saw the fastest rise in output for six-and-a-half years, an increase in employment for the fourth month running and a further steep input cost inflation signalled.

This was against a slowing growth rate nationally - the UK as a whole was at a nine-month low according to Markit's business activity (output) index, compared to a 78-month high in the East of England.

At 58.5 in June, up from 58.0 in May, the seasonally adjusted index - which measures the combined output of the region's manufacturing and service sectors - indicated that business activity had increased for the fourteenth consecutive month.

Moreover, the rate of expansion was the second-fastest in the series history, and the steepest since December 2003.

Panellists indicated that activity growth mainly reflected a steep increase in new business.

New orders rose at the joint-second fastest pace in the history of the survey, slower only than the series record posted in March 2004.

According to respondents, new orders had expanded from both domestic and external markets. New business rose strongly across both manufacturing and services.

A combination of rising new business and delays from suppliers resulted in a second successive monthly accumulation of backlogs of work.

Higher workloads led companies to take on more staff in June, extending the current sequence of job creation to four months.

The increase in employment was driven by the manufacturing sector, while staffing levels in the service sector were broadly unchanged.

At a two month high, the employment indexed in the East was in line with the rest of the UK.

Although the slowest in the year-to-date, the rate of input cost inflation signalled in June was still substantial.

According to respondents, higher raw material costs were the main factor behind the rise, with steel and timber mentioned in particular.

Companies were often able to pass on increased input costs to their clients by way of higher output prices. The rate of inflation was sharper than seen across the UK overall and faster than the long-run average for the series.

Charges at manufacturing firms were increased much more quickly than at services companies.

More info: This article is courtesy of EDP

Posted: 13th Jul 2010