Businesses across the East of England have seen a sharp increase in output and new orders despite growth rates easing, a new study has found.

The Lloyds Bank PMI survey for the region revealed that the combined output of the region's manufacturing and service sectors posted above the neutral threshold at 58.6 – down slightly from April's 59.9.

Meanwhile, anecdotal evidence suggested that a rise in order intakes and increased construction sector demand were the main drivers behind the latest expansion, the bank said.

It comes as the survey data signalled a further rise in employment at East of England companies, with the rate of job creation down only fractionally from April's record high. More than one-in-five surveyed companies hired additional workers, while only 6pc shed staff.

Steve Elsom, Lloyds Bank Commercial Banking's area director for SME Banking in the East of England, said: 'May's survey results provide further encouraging news about the health of the private sector across the East of England.

'Business activity and new orders rose strongly during May and companies continued to take on additional workers in order to meet higher demand. This indicates that companies are likely to remain in expansion mode in the coming months.'

The average cost burdens increased further during May, but the rate of cost inflation eased to an eight-month low.

Companies linked rising input prices to increased raw material prices and higher staff costs.

Output prices rose at a faster pace than in April. Sector data suggested that manufacturers and service providers both raised their charges.

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