Businesses in the East of England saw strong demand for their goods and services during January and continued to create new jobs despite a slight slowdown in output growth, according to the latest Lloyds Bank Regional PMI report.

But the data from January showed that business activity, new orders and employment all continued to increase, and more quickly than the UK average, despite the rate of growth easing when compared with December.

The weak pound continued to have an effect on costs, however, with average prices for raw materials, salaries and fuel rising at the fastest pace in almost six years. This drove many businesses to pass on part of their higher cost burden to customers in the form of raised prices.

Steve Elsom, regional director for the East of England at Lloyds Bank Commercial Banking, said: 'Firms across the East of England kicked off the new year on a strong footing, with significant growth of order books, business activity and new jobs.

'There were, however, signs of inflationary pressure due to the weaker pound and a slight stall in economic growth in comparison with December, which could affect price-conscious consumers in the coming months.'

The Lloyds Bank Regional PMI, or purchasing managers' index, is a leading economic health-check of UK regions. It is based on responses from manufacturers and services businesses about the volume of goods and services produced during January compared with a month earlier.