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‘Slowdown in new business’ cools North East output growth

North East private sector firms have reported a slower rise in business activity during July, according to the latest Lloyds Bank Commercial Banking North East PMI survey .

The latest increase was the least marked in five months, reflecting a weaker increase in new business. Backlogs of work were depleted at an accelerated rate, while employment growth eased to a four-month low. Input prices fell slightly, while output charges decreased at the sharpest rate since April.

Business activity at private sector companies in the North East continued to rise in July. That said, the rate of expansion moderated to the slowest since February and was below the UK average. Lloyds’ seasonally adjusted inde, which measures the combined output of the region’s manufacturing and service sectors, posted 54.7 down from 57.1 in June.

New business received by North East private sector firms also increased at a weaker rate in July. The latest rise in new work was the slowest since October 2014.

Staffing levels at North East private sector firms increased for a ninth successive month in July. However, the rate of job creation eased to the slowest since March. Jobs growth was centred on the service sector, whereas manufacturers lowered payroll numbers slightly.

Backlogs of work in the North East private sector decreased for the fourth month running during July. Moreover, the rate of depletion was the sharpest in three years.

Input prices in the North East fell for the first time in three months during July, albeit marginally. Differing trends were recorded at the sector level, with manufacturers signalling a decline in costs but service providers noting a further rise.

July data pointed to a reduction in prices charged by private sector companies in the North East for the second month in succession. The rate at which selling prices were reduced was the sharpest since April. Panellists commonly mentioned strong competitive pressures as a factor weighing on selling prices.

Commenting on the Lloyds Bank Commercial Banking North East PMI® survey, Leigh Taylor, area director for SME Banking in the North East, Lloyds Bank Commercial Banking, said: “Output growth in the North East cooled further from April’s recent peak at the start of the third quarter.

“A slowdown in new business growth was the driving factor, freeing up spare resources and allowing backlogs to be depleted at the sharpest rate in three years. Output prices were lowered further, a reflection of lingering competitive pressures.”

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