SW economy loses momentum in June

The South West economy lost momentum in June as business activity growth slowed, according to the latest Lloyds Bank UK Regional PMI® survey.

The South West PMI fell to 52.6 in June, from 53.8 in May. A reading greater than 50.0 signifies growth in business activity.

The latest reading signalled the slowest rise in activity since the month after the EU referendum. The PMI reading was also below the UK average (53.8).

Despite this, firms continued to create jobs, marking 12 months of continuous employment growth in the region.

Data for June also showed another steep rise in businesses’ cost base – including raw materials, salaries, rent and other overheads – partly due to the weak pound. Average prices charged for goods and services increased as firms looked to shift some of the burden of these higher costs onto customers.

The Lloyds Bank PMI, or purchasing managers’ index, is the leading economic health-check of UK regions. It is based on responses from manufacturers and service providers about the volume of goods and services produced during June compared with a month earlier.

David Beaumont, regional director for SME banking in the South West at Lloyds Bank Commercial Banking, said: “It’s been a disappointing end to an otherwise positive second quarter for the South West economy, with business activity showing the slowest increase for almost a year.

“The region’s performance was slightly weaker than the UK as a whole. This was also the case for employment growth which slowed when compared to May. Cost pressures meanwhile remained at a high level at the mid-way point of the year, which added further pressure on margins for firms.”