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Growth of South West economy strongest in three months
10 August 2010
Key points:
- New order expansion gathered pace.
- Backlogs continued to fall, and at a solid rate.
- Output prices rose for sixth successive month.
Historical Overview
Summary
July data signalled marked growth of the South West private
sector economy. The headline seasonally adjusted Business Activity
Index – which measures the combined output of the region’s
manufacturing and service sectors – posted 54.5, up slightly from
54.3 in June, and above that reported for the UK as a whole for the
first time in nine months. The latest rise in activity was
supported by a further increase in new orders received. However,
this was boosted mainly by the region’s manufacturing sector, with
service companies continuing to record lower activity and new work.
Nonetheless, the rise in overall activity supported a further
increase in employment. Meanwhile, input cost inflation eased for a
third successive month.
Companies in the South West reported a marked rise in activity
during July, which was the fifteenth in successive months.
Moreover, the rate of output growth accelerated for a second
consecutive month.
A further increase in new order volumes supported the rise in
output. Incoming new business has now increased in each of the last
ten months, with the latest expansion the strongest in three
months. Anecdotal evidence suggested that the rise in new orders
reflected an ongoing improvement in general economic
conditions.
July data signalled a marginal rise in employment within the
South West. However, the latest increase in staffing levels was the
slowest in the current five-month sequence of rises. The increase
in headcounts was largely focused in the region’s manufacturing
sector.
Despite accelerated growth in new order volumes, backlogs of
work fell again in July. Nonetheless, the latest reduction in
outstanding business was weaker than that indicated for the UK as a
whole, and slower than the long-run average for the series.
Input costs faced by companies in the South West continued to
rise in July, with input price inflation now sustained for nineteen
successive months. However, the latest increase in costs was the
slowest in eleven months. Reflective of the further rise in input
prices, companies in the South West reported another increase in
charges. However, the rate of output price inflation was only
marginal, with the extent of the latest rise limited by strong
competition for new business. Nonetheless, charges have now risen
for six successive months.
Comment
Commenting on the South West PMI survey, Shane Vallance,
Economics and Evidence Manager at South West RDA, said:
"The story of the last few months - that of a tentative recovery
primarily driven by the manufacturing sector - continued into July.
It’s encouraging to see this was driven by growth in new orders,
rather than businesses reducing backlogs. On the other hand, the
national picture shows momentum in the economic recovery is
slowing."
Ends
For further information, please contact:
South West RDA
Shane Vallance
Economics and Evidence Manager, South West RDA
Tel: 01392 229377
Email: shane.vallance@southwestrda.org.uk
Fiona Clampin
Press Office, South West RDA
Tel: 01392 229389
Email: fiona.clampin@southwestrda.org.uk
Markit
Sarah Ledger, Economist Telephone +44-1491-461-050 Email sarah.ledger@markit.com
Caroline Lumley, Corporate Communications Telephone
+44-20-7260-2047 Email caroline.lumley@markit.com
Notes to Editors
The South West PMI features original survey data collected from
a representative panel of companies based in the South West and
operating in both manufacturing and service sectors.
The survey forms part of a series of regional surveys published
by Markit Economics and is derived from the highly regarded
national PMI surveys produced by Markit for the Chartered Institute
of Purchasing and Supply.
Purchasing Managers’ Indexes (or PMIs) are monthly surveys of
carefully selected companies which provide an advance indication of
what is really happening in the private sector economy by tracking
variables such as output, new orders, employment and prices across
both manufacturing and service sectors. The PMI surveys are based
on fact, not opinion, and are the first indicators of economic
conditions each month. The data are collected using identical
methods in all countries and regions so that accurate comparisons
may be made.
Questionnaires are completed in the latter half of each month
and are collected and processed by economists at Markit Economics.
Respondents are asked to state whether business conditions for a
number of variables have improved, deteriorated or stayed the same
compared with the previous month.
Index numbers are calculated from the percentages of respondents
reporting an improvement, no change or decline. These indices vary
between 0 and 100 with readings of exactly 50.0 signalling no
change on the previous month. Readings above 50.0 signal an
increase or improvement; readings below 50.0 signal a decline or
deterioration.
Reasons given by survey respondents for any changes are analysed
to provide insight into the causes of movements in the indices and
are also used to adjust for expected seasonal variations.
About South West RDA
South West RDA is the regional development agency for South West
England. We are one of eight RDAs set up by government in 1999 to
improve the economic performance of the English regions. We lead
the development of a sustainable economy in South West England,
investing in jobs, supporting businesses, improving places and
creating the conditions for business to prosper. The South West is
the largest of England’s regions in land area, with a population
larger than Scotland. The South West’s economic strengths include
aerospace, information technology, creative industries, tourism
and, increasingly, environmental technologies – all contributing
towards a regional economy worth approximately £98 billion per
annum (on 2008 data)and driven by over 200,000 businesses.
About Markit
Markit is a leading, global financial information services
company with over 1,900 employees. The company provides independent
data, valuations and trade processing across all asset classes in
order to enhance transparency, reduce risk and improve operational
efficiency. Its client base includes the most significant
institutional participants in the financial market place. For more
information, see www.markit.com
About PMIs
Now available for 26 countries and key regions including the
Eurozone and BRIC, Purchasing Managers’ Indexes™ (PMIs™) have
become the most closely-watched business surveys in the world,
favoured by central banks, financial markets and business decision
makers for their ability to provide up-to-date, accurate and often
unique monthly indicators of economic trends. To learn more go to
www.markit.com/economics.
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herein is owned by Markit Group Limited. Any unauthorised use,
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