South West registers stronger rise in output in November

The South West private sector economy registered a pick-up in growth in November from October’s recent low, according to PMI survey data.

The rates of expansion in total activity and new business both accelerated for the first time since June, but remained weaker than the respective UK averages. Job creation continued at a solid pace and outstanding business increased further, while inflationary pressures remained historically muted.  

The seasonally adjusted Lloyds Bank Commercial Banking South West Business Activity Index signalled growth of private sector output in November. Moreover, the Index rose to 55.3, from 52.5, indicating the fastest rate of expansion since August and the first acceleration in growth since June. The rate of growth was strong overall, but weaker than the average over the current 20-month sequence and the UK average for November. 

The South West remained in the lower half of the UK growth table in November, having been the bottom-ranked region in October. Sector data linked this to another comparatively lacklustre service sector performance.

New business followed a similar trend to output in November, with the rate of growth accelerating for the first time in five months to the fastest since August. The rate of growth was strong overall, notably in manufacturing, but slightly weaker than the UK trend.

Survey data continued to indicate pressure on capacity in November, with the volume of incomplete work rising for the fifteenth time in 17 months. The rate of growth was moderate, and broadly in line with the UK average.

Backlogs rose despite a further rise in employment in the private sector. Jobs were added for the twentieth successive month, with manufacturers seeing stronger payroll growth than service providers.

Input price inflation ticked higher to the second-strongest in 2014 so far, but remained relatively weak. Rising cost burdens were mainly concentrated at service providers who reported wage pressures. Meanwhile, prices charged rose only marginally.

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 saw an acceleration in its rate of expansion for the first time since June. Although manufacturing continues to outperform the UK average, the services sector – which accounts for a much greater share of the economy – continued to register comparatively weaker growth than in other parts of the country.”