SW private sector growth remains robust


The south west economy posted further expansion in August, according to the latest Markit PMI data.

The region’s private sector activity grew for the fourth successive month, although pressure on margins remained, with input costs continuing to rise and output prices falling further.

Meanwhile, employment continued to be cut at a substantial pace. The headline seasonally adjusted Business Activity Index – which measures the combined output of the region’s manufacturing and service sectors – posted 56.5 in August, from 56.8 in July.

The south west economy maintained its expansionary phase in August, posting a marked rate of growth in business activity which was surpassed by only one other UK region. The service sector was the principal driver of output growth during the latest survey period.

Higher activity was achieved despite volumes of incoming new business rising at a slower pace during August. New work increased at the slowest rate in the current four-month period of growth. The slower pace of expansion of largely reflected weakness of new orders in the manufacturing sector.

With new business growing at a weaker pace, companies were able to make significant inroads into their backlogs of work during August.

Outstanding business fell at the sharpest rate for three months. Panellists frequently commented on the existence of spare capacity.

Despite the recent upturns in activity and new work, companies in the South West private sector continued to cut staff numbers at a marked rate in August. The rate of contraction was faster than the UK average.

Input costs for private sector companies in the South West continued to rise during August. However, the rate of inflation eased to the slowest in three months. In contrast, output prices continued to decrease, dropping for a sixth consecutive month in August.

Panellists commented that selling prices had been reduced in an attempt to stimulate new business. The reduction in charges was broadly in line with that registered across the wider UK economy.