Weakest rise in new business since April 2013
The South West private sector registered a slower rise in output in July, according to the latest PMI® survey data.
Moreover, the volume of new business increased at the weakest pace since April 2013, signalling a further moderation in growth of total business activity in the coming months. More positively, prices charged for goods and services increased at the fastest rate since February 2014.
The seasonally adjusted Lloyds Bank Commercial Banking South West Business Activity Index remained well above the no-change mark of 50.0 in July, at 56.3, indicating a strong overall rate of growth in private sector output. The Index remained above its long-run average of 54.1, but fell from 58.3 in June and was below the average over the current 28-month sequence of expansion. The overall weakening in output growth in July reflected the service sector, as manufacturing production increased at a faster pace during the month.
Slower activity growth at private sector companies was partly due to a weaker rise in incoming new work. The volume of new business increased at the slowest pace since April 2013, and the South West registered a softer rate of expansion than all other UK regions in the latest period except Scotland.
Private sector firms in the South West continued to report higher average input prices in July, linked to staff costs, regulatory compliance costs and higher prices from some suppliers. The rate of inflation strengthened from June, but remained weaker than the long-run survey average.
July survey data signalled strengthening pricing power in the South West private sector. Charges rose for the third month running, and at the fastest rate since February 2014.
The slower rise in new business enabled firms to complete existing workloads in July. Backlogs fell for the fourth time in six months, in contrast with a rise across the UK as a whole.
Private sector employment in the South West continued to rise solidly in July. That said, the rate of job creation slowed to the weakest since August 2013.
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 lost some momentum in July, with the rate of growth slightly weaker than the trend shown over the first half of the year.
"Moreover, new business rose at the slowest rate since early-2013 and backlogs fell, suggesting that output expansion will weaken further as we move through the third quarter. That said, overall growth remains solid, and firms felt confident enough to raise their prices at the strongest pace since early-2014.”
