Business growth activity slows in the East of England but remains positive
- Credit: Bernard Pound
Growth in business activity eased in the East of England as the region fell behind the UK average, data has revealed.
The East of England's purchasing manager index (PMI) score fell to 54.2 in May, down from 57.3 in April, according to the Lloyds Bank UK Regional PMI survey.
A PMI reading above 50 signifies growth in business activity.
Data from May showed that rate at which firms created new jobs hit a four-month high in May as growing demand saw businesses continue to face rising new orders, albeit at a slower pace compared with April.
Business confidence improved to the strongest in 11 months, with planned expansions and further capital investment expected to bolster market demand in the year ahead, according to anecdotal evidence.
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Despite this, the weak pound continued to put pressure on businesses.
Cost inflation remained sharp in May, with prices paid for raw materials increasing. This resulted in firms passing higher cost burdens to their customers by raising prices.
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The index is based on responses from manufacturers and services businesses about the volume of goods and services produced during May compared with a month earlier.
Steve Elsom, regional director for SME banking in the East of England at Lloyds Bank Commercial Banking, said: 'The East of England economy continued to grow during May, but lost some of its momentum as growth slowed below the UK average as a whole for the first time in more than two years. This was a result of a slower rate of growth in output and new orders for firms.
'Companies continued to raise prices for goods and services, adding to a squeeze on consumer finances. On a positive note, business sentiment peaked at an 11-month high and a healthy rate of employment growth continued to support the local economy.'