SW private sector growth continues

The South West private sector registered a further moderation in growth of output in August, according to the latest PMI® survey data.

Moreover, the volume of new business increased only fractionally, and backlogs were depleted for the third consecutive month. As a result, private sector employment rose at the slowest rate in over two years. Meanwhile, input prices were unchanged over the month, and output prices barely rose. 

The seasonally adjusted Lloyds Bank Commercial Banking South West Business Activity Index remained above the no-change mark of 50.0 in August, indicating overall growth of private sector output across the region.

The current sequence of expansion now stretches to 29 months. That said, the respective index fell for the second month running from June’s 12-month high of 58.3 to 53.4, indicating the weakest rate of growth since last October. The index was also below its long-run average of 54.1. Services remained the main source of the moderation in growth during the latest period. 

New business rose for the twenty-ninth consecutive month in August. That said, the rate of expansion weakened further and was only fractional. Moreover, the South West registered the slowest rise in new work among all 12 UK regions surveyed.

Firms in the South West reported a further drop in outstanding business in August. Backlogs have declined five times in the past seven months, with the latest contraction being the fastest since May 2013.

Companies continued to raise headcounts, on average, in August. In line with the trends for output and new business, the rate of job creation slowed further and was the weakest since April 2013.

Commenting on the Lloyds Bank Commercial Banking South West PMI® survey, David Beaumont, area director for SME Banking in the South West, said: “The South West looks set for a softer rate of economic growth in the third quarter, in line with the trend shown for the UK as a whole.

"Output across the region rose at the slowest pace in ten months in August, but of greater concern will be the weakest rise in new business in over two years. Reflecting this, backlogs fell at the strongest rate since May 2013. On a positive note the latest survey highlighted an absence of inflationary pressures in the region.”