Member Article

Regional output growth calms recession fears

February saw an improvement in private sector business conditions across English regions, latest figures show.

The Lloyds TSB regional Purchasing Managers’ Index showed output growth was generally slower than January highs, but suggests that eight of the nine English regions will rebound in private sector activity over the first quarter of 2012.

The West Midlands maintained its top position in the regional growth tables, while South West presented an exception, as the region posted a slight drop in output during February, and saw only marginal growth during the previous month.

Elsewhere, the East of England saw an acceleration of output growth last month, the strongest for almost a year, and the North East’s activity remained broadly unchanged.

All nine regions recorded a rise in new business, with the West Midlands and East Midlands outperforming the UK average.

Commenting on the findings, John Maltby, group director, Lloyds TSB Commercial, said: “Despite an overall dip in growth from January’s high, private sector activity across the English regions still expanded at a relatively solid pace during February.

“This provided another welcome antidote to lingering fears of a double-dip recession at the turn of the year.

“The latest survey suggests that the Midlands was the backbone of the recent rebound in output.

“The West Midlands recorded its fastest private sector expansion for almost four-and-a-half years.

“However, the South West and North East lost momentum in February, meaning that regional growth disparities in England were wider than at any point since the recovery began in mid-2009.

“Despite this, the near-term outlook seems relatively positive for local businesses, as rising levels of new business were seen across all nine English regions last month.”

Improving conditions contributed to higher levels of private sector employment during February, with the fastest pace of job creation occurring in Yorkshire and Humber, followed by the East Midlands.

However, London saw a drop in staffing levels, extending falling employment into the fourth month.

The majority of regions experienced acceleration of input cost inflation; higher cost burdens at both manufacturers and service providers underpinned the latest solid rises in input prices, with a number of firms citing increased fuel bills at their units.

Through anecdotal evidence, it was suggested that strong competition for new work had placed pressure on operating margins in February.

Mr Maltby added: “February’s survey shows that output charges fell slightly across the English regions, which in turn should provide support for a further softening of UK consumer price inflation.

“Input cost inflation among local firms was relatively subdued, but the latest survey indicates a general acceleration since January amid signs that higher oil-related prices on world markets have started to place stronger pressure on cost burdens.”

This was posted in Bdaily's Members' News section by Tom Keighley .