SW economy registers slower growth in January

Economic growth in the South West lost momentum at the start of 2017, while there was a strong rise in cost pressures faced by local businesses, according to the latest Lloyds Bank Regional PMI.

The South West PMI® fell to 54.8 in January, down from 58.7 in December. A PMI reading above 50 signifies growth in business activity.

Data from January showed that the pace of growth in business output and new work eased. Firms continuing to create jobs, however, albeit at a slower rate than in December.

This extra caution towards hiring can be linked to rising input costs, which continued to increase sharply amid the weak pound and higher oil and metal prices. This drove many businesses to pass on part of their higher cost burden to customers in the form of raised prices for goods and services.

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 January compared with a month earlier.

David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking, said: “Firms in the South West ended 2016 on a strong footing but experienced a slight slowdown in business activity growth at the start of the new year.

“Demand for products and services rose at a slower rate, but still remained solid overall. Firms continued to increase headcounts, though the pace of job creation eased, which likely reflects pressure on costs brought about by the weak pound.”