Lloyds Banking Group

October 03, 2013 09:46 ET

Record Rate of Growth Across English Regions, and Further Strong Increase in Business Activity in Wales

- Combined business activity of the English regions increased at the strongest rate since 2001

- Wales recorded strongest increase in output since September 2009

- Job creation seen across Wales and all English regions, led by the West Midlands

LONDON, UNITED KINGDOM--(Marketwired - Oct. 3, 2013) - The combined business activity of the English regions increased at a record rate in August, according to the latest Lloyds Bank Commercial Banking Regional Purchasing Managers' Index® (PMI®) survey, while Wales recorded its strongest rate of expansion for almost four years.

The headline index measuring overall business activity across the English regions rose to 61.0 in August, signalling the strongest growth since the series began in January 2001. This was also a significant rise compared to last month's index reading of 60.0. Furthermore, the index has now posted above the 50.0 'no-change' mark for ten consecutive months, and the latest reading reveals that the strong rebound in economic conditions seen over the summer of 2013 continues.

In Wales, overall business activity rose marginally to 57.7 in August from 57.6 in July, remaining above the 50.0 'no-change' mark for the thirteenth successive month. August saw the strongest rise in the combined output of Welsh manufacturing and service sector businesses since September 2009.

Of all the English regions, the North West saw the strongest rate of expansion last month (64.0), followed by the South East (62.7). Companies in the North East recorded the slowest rise in business activity (56.3), followed by those based in Yorkshire & Humber (57.3).

Survey respondents cited a wide range of factors that had boosted recent business activity, including higher consumer demand and greater investment spending amongst both public and private sector clients. Some firms also reported rising volumes of export sales in August. All areas of England and Wales reported an increase in incoming new work, led by London (63.5) and the South East (62.6).

Private sector companies across all nine English regions took on new staff during August, with the West Midlands recording the strongest speed of job creation (55.1). In Wales, employment levels rose only slightly over the same period (50.1).

Private sector firms across all of England and Wales reported rising cost burdens in August, with the steepest rate in input price inflation seen in the East Midlands (58.1). Wales recorded a solid increase in average private sector tariffs (54.3), while all nine English regions also saw an increase, led by the North West (53.1). Higher costs were mostly linked to greater energy bills and increased staff salaries, which in turn led some manufacturers and service providers to raise their own output prices in August.

David Oldfield, Managing Director, SME & Mid Markets Banking, Lloyds Banking Group, said: "Businesses across England and Wales took another step forward on the path to recovery in August, helped by improving conditions in both domestic and export markets.

"The strong growth seen in all the English regions is another sign that the country is returning to growth, as the combined rate of output expansion during August was the strongest for over a decade. Wales has also witnessed strong improvements this summer, with business activity increasing at the strongest rate for around four years.

"The most encouraging aspect of the recent increase in business activity is that it has fuelled job creation across the private sector. We have seen employment growth across England and Wales this summer and all the signs are that we should expect more of this good news over the coming months."

To view PMI Business Activity (Output) Index and Heat map please click on the following link: http://media3.marketwire.com/docs/LBG1003.pdf

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Compiled by Markit for Lloyds Bank Commercial Banking, this report is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 1200 private manufacturing and services companies. The panel is carefully selected to accurately replicate the true structure of the private sector economy.

England's Regional PMIs are based on data compiled in August 2013. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the 'Report' shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the 'diffusion' index. This index is the sum of the positive responses plus a half of those responding 'the same'. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease.

The Wales PMI® features original survey data collected in August 2013 from a representative panel of companies based in Wales and operating in both manufacturing and service sectors.

The Purchasing Managers' Index® (PMI®) survey methodology has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.

About Lloyds Bank Commercial Banking

Lloyds Bank Commercial Banking provides comprehensive expert financial services to businesses of all sizes, from start-ups, through to small businesses, mid-sized businesses and multinational corporations. These corporate clients range from privately-owned firms to FTSE 100 PLCs, multinational corporations and financial institutions.

Maintaining a network of relationship teams across the UK, as well as internationally, Lloyds Bank Commercial Banking delivers the mix of local understanding and global expertise necessary to provide long-term support and advice to its clients.

Lloyds Bank Commercial Banking offers a broad range of finance beyond just term lending and this spans import and export trade finance, structured and asset finance, securitisation facilities and capital market funding. Its product specialists provide bespoke financial services and solutions including tailored cash management, international trade, treasury and risk management services.

Its heritage means it has an unrivalled understanding of business needs and a proven track record of supporting businesses across the sectors and regions. Taking a relationship approach, it provides support to its clients throughout the economic cycle.

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