Business activity in England and Wales jumps in fourth quarter
North West, West Midlands and Yorkshire & Humber see strongest rise in business activity, while growth slows in London
Business activity across England and Wales picked up speed in the fourth quarter of 2016, according to the latest Lloyds Bank Regional Purchasing Managers’ Index (PMI) survey.
On the survey, a reading above 50 signifies growth and one below signifies contraction. The greater the divergence from 50, the faster the rate of change.
England’s PMI increased from 54.0 in September to a nine-month high of 54.9 in October – and was significantly higher than the low of 47.4 in July.
The strongest rise in business activity was seen in the North West with a two-year high of 58.4, followed by the West Midlands (58.2) and Yorkshire & Humber (57.9). Over the same period, London’s PMI slowed to a two-month low of 52.8.
Wales continued to see strong growth, with its PMI rising from 56.2 in September to a 16-month high of 57.2 in October.
A weaker pound driving stronger international demand for UK products and services was thought to be partly responsible for the upturn in business activity. However, this also caused a sharp increase in business costs, resulting in the biggest jump in average prices for goods and services in five-and-a-half years.
Tim Hinton, managing director of mid-markets and small business banking at Lloyds Banking Group, said: “It’s encouraging to see UK business activity growth back at the same, higher levels we had at the start of the year, driven by demand both at home and overseas.
“However, prices are rising at their fastest rate for over five years and the likelihood of greater inflationary pressure is very real. This will create potential headwinds for both consumers and businesses going forward.”