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South West economy expanded at sharper pace in February
08 March 2010
South West PMI
Sponsored by England's Regional Development Agencies
Key points
- Stronger rises in output and new orders.
- Private sector companies continued to cut jobs.
- Input prices rose again and at the strongest pace in seventeen
months.
Historical Overview
Summary
South West PMI® data signalled that growth in both new business
and activity regained momentum during February, after expansion
weakened in January. The headline seasonally adjusted Business
Activity Index posted 57.4 from 53.8 in January. Jobs were cut only
marginally, with the service sector bearing the brunt of the
reductions. Meanwhile, output prices increased modestly, and for
only the second time in a year, although input costs continued to
rise markedly.
Business activity in the South West increased in February for a
tenth successive month. Moreover, the rate of expansion accelerated
since January and was the second strongest in the current period of
growth. Nonetheless, it remained below that reported for the wider
UK economy.
Incoming new business received by the region’s firms increased
markedly during February. This was led by a rise in new order
intakes within the manufacturing sector, partly reflecting a
further improvement in demand from abroad.
Jobs continued to be cut within the South West. However, the
rate of job shedding slowed for a sixth successive month to the
weakest since April 2008.
Outstanding business at the region’s firms fell marginally
during February, predominately reflecting a degree of spare
capacity at service sector companies. In contrast, manufacturers
indicated that backlogs had increased during the month, as
shortages of raw materials and longer lead times at suppliers
impacted upon production.
February data signalled that input prices faced by companies in
the South West increased markedly. The rate of cost inflation
accelerated marginally since January and was the strongest in
seventeen months. Rising costs affected both manufacturing and
service sector panellists. Some noted that increased demand for raw
materials drove input costs higher.
Reflective of the sustained rise in input prices, charges were
increased during the month. Moreover, the pace at which output
prices rose was solid, and the fastest since November 2008.
Manufacturing companies indicated stronger pricing power compared
to firms in the service sector, with the latter reporting that
competition had prevented any meaningful rise in charges.
Comment
Commenting on the South West PMI survey, Shane Vallance,
Economics and Evidence Manager at South West RDA, said:
“It is reassuring the survey indicates that businesses have
recovered strongly since the adverse weather effects we noted last
month. The increase in new manufacturing orders from abroad gives
further weight to signs that the weak pound is now beginning to
help some of our exporters.”
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
Virginia Marsh
Corporate Communications Adviser
Tel: 01392 229548
Email: Virginia.marsh@southwestrda.org.uk
Markit
Sarah Ledger, Economist
Telephone +44-1491-461-050
Email alex.hamilton@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.
The indexes are seasonally adjusted to take into consideration
expected variations for the time of year, such as summer holiday
shutdowns and national holidays.
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 1,400 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 Markit Economics
Markit Economics is a specialist compiler of business surveys
and economic indices, including the Purchasing Managers' Index
(PMI) series, which is now available for 26 countries and key
regions including the Eurozone and BRIC. The 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.
The intellectual property rights to the South West PMI provided
herein is owned by Markit Group Limited. Any unauthorised use,
including but not limited to copying, distributing, transmitting or
otherwise of any data appearing is not permitted without Markit’s
prior consent. Markit shall not have any liability, duty or
obligation for or relating to the content or information (“data”)
contained herein, any errors, inaccuracies, omissions or delays in
the data, or for any actions taken in reliance thereon. In no event
shall Markit be liable for any special, incidental, or
consequential damages, arising out of the use of the data. Markit,
PMI and Purchasing Managers' Index are all trademarks owned by The
Markit Group.