South East PMI Press Release October 2010
11 October 2010Key points:
- Weakest rise in new business since August 2009.
- Activity rose at slower pace than UK trend for second month running.
- Fastest rise in average input costs for four months.
Historical Overview:
Summary:
The South East PMI™ report for September, conducted by Markit on behalf of the South East England Development Agency (SEEDA), underlined the weaker growth path of business activity in the region over Q3 compared to the first half of 2010. The rate of expansion in output remained modest, as the seasonally adjusted Business Activity Index rose slightly to 52.6, from 51.9 in August.
Sector data suggested that service sector activity rose at a slightly sharper pace, while manufacturing production growth stagnated. Prior to August, manufacturing had registered stronger growth than services throughout the current sequence of expansion.
Growth of incoming new business in the South East moderated further in September, continuing the trend seen since April. The overall rate of new order growth was the slowest since August 2009, with similarly weak expansions seen across manufacturing and services.
Growth of workloads and new business in the South East private sector were sufficient to generate an overall expansion of the regional workforce. This was the fifth time in six months that employment had risen. The rate of job creation was slightly sharper than the long-run trend for the series since January 1997.
The relatively weak improvement in new business in the South East in September was underlined by a further decline in outstanding work. Backlogs have fallen continuously since February, and the rate of contraction was the steepest since September 2009.
Input price inflation remained relatively sharp in the context of historic survey data in September. The rate of inflation accelerated to a four-month high, driven by a range of inputs including metals, timber, paper, plastics, foodstuffs and labour. Firms passed on higher input costs to customers by increasing charges at the second-fastest rate of the past 23 months. Output price inflation was broadly in line with the long-run series trend.
Comment:
Commenting on the South East PMI survey, Paul Lovejoy, Executive Director at SEEDA, said:
“The latest survey reinforces our view of continuing but modest expansion of business activity in the region’s economy in September. Weaker demand and continuing increases in input prices have led to a sharp slowdown in manufacturing growth but it is encouraging to see an increase in investment in capacity and a slightly sharper pace of expansion in service sector activity. Whilst it is encouraging to see that employment growth has returned to the South East's business base private sector economy, a further moderation of growth in incoming new business raises concerns about the strength of the recovery in the South East.”
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