The growth in the south west economy has been sustained for the 14th successive month, according to latest Markit South West PMI figures.
Growth of private sector business activity in the region accelerated during June. The headline seasonally adjusted Business Activity Index – which measures the combined output of the region’s manufacturing and service sectors – posted 54.3, up from 52.8 in May, although remained below that reported for the UK as a whole.
The index has now registered above the 50.0 no-change level for 14 successive months. The overall expansion in output supported a fourth successive rise in employment. Meanwhile, input cost inflation eased during the month, although remained marked.
Companies in the south west reported a marginal rise in incoming new business during June. However, the rate of new order growth was the second-slowest during the current nine-month period of expansion. Stronger intakes of new work in the manufacturing sector predominately drove the overall increase in new orders.
Companies in the south west indicated a modest rise in employment in the month. The latest increase in staffing levels was above that of the wider UK, and the fourth in successive months.
Headcounts increased despite a further reduction in backlogs of work in June, suggesting a degree of spare capacity at firms. Moreover, the rate of decline in outstanding business was faster than in the previous survey period. The latest decrease in backlogs was primarily led by the service sector.
June data signalled a marked rise in input prices faced by companies in the south west. However, the rate of input cost inflation slowed further from the 19-month high recorded in April, and was below the long-run average for the series.
Output prices were also reported to have increased, although the extent of the rise was only marginal. Moreover, the rate of output price inflation was the lowest in the current five-month period of rising charges. Anecdotal evidence suggested that the ongoing rise in input costs led to increased charges. However, firms’ ability to protect margins was limited by strong competition for new business.