Member Article

Slowdown in regional growth, finds latest Lloyds Bank PMI

The latest Lloyds Bank PMI survey has indicated that business activity in the North East rose marginally in May although weak regional growth persists.

The latest PMI reading dropped to 50.8 in May, from 52.0 in April. This compares with a national figure of 54.4, which shows regional businesses aren’t seeing as healthy a rate of growth as other areas of the UK.

A figure above 50 signifies expansion in business activity, while a reading below 50 signals contraction.

Despite a slowdown in growth, employment rose in the North East for the first time in three months in May, with firms taking on new staff to meet an increase in demand.

While input costs - including raw materials, wages and other overheads - rose at the slowest rate for almost a year, firms are still passing the burden to customers, increasing their 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 May compared with a month earlier.

The North-East findings are based on a range of questions posed to businesses across Northumberland, County Durham, Tyne and Wear and the Tees Valley.

Leigh Taylor, regional director for the North East at Lloyds Bank Commercial Banking, said: “It’s disappointing to see a slowdown in regional growth, with North East firms reporting only a slight rise in output last month.

“But on a more positive note, as we move towards the half-year mark, employment is back on the rise, positioning businesses in the region to take advantage of an increase in demand for their goods and services.”