South west private sector firms signalled a modest contraction in output during July as the volume of incoming new orders fell for the second successive month.
According to the latest findings from the Lloyds TSB South West PMI survey, with weaker demand and increasing workforces, backlogs of work fell at a sharp pace. Meanwhile, input price inflation persisted and charges rose, albeit at weak rates.
The headline Lloyds TSB South West Business Activity Index – a seasonally adjusted index that tracks changes in the combined output of the region’s manufacturing and service sectors – posted 48.6 in July, down from 51.3 in June. The latest reading pointed to the first deterioration in private sector activity since February.
The manufacturing sector posted a solid expansion in production, but service providers registered a contraction in business activity. Overall output in the south west fell at a modest pace, and the rate of decline was faster than that seen at the UK level.
New orders fell at both manufacturers and service providers, with the faster decline recorded in the service sector.
Private sector firms in the south west recorded a further increase in workforces during July. That said, the pace of increase was only slight, and slower than that seen at the UK level. Job creation was signalled by manufacturers, but service providers noted a mild fall.
Commenting on the Lloyds TSB South West PMI survey, David Beaumont, area director for Lloyds TSB Commercial in Devon and Cornwall, said: “Business activity in the south west fell for the first time since February, as new orders continued to decrease amid fears of an economic slowdown.
“Private sector companies recorded a further increase in output prices as input costs rose, but the rate of charging inflation slowed to a marginal pace.”