Figures show recovery is slowing down

OUTPUT and jobs growth slowed in the majority of English regions with Yorkshire seeing a fall in staffing, figures have shown.

According to the latest Purchasing Managers Index (PMI) data, which is commissioned by England’s regional development agencies (RDAs), all nine regions continued to register solid growth of private sector business activity in May.

The North West was the strongest performing region despite output growth easing to a four month low.

But while figures suggest that recovery in the manufacturing and services remained remains on track they also point to a slowdown.

Meanwhile, sharp cost inflation persisted in May driven by steep increases in manufacturers’ input prices.

Higher overall cost burdens led to an increase in average charges across all nine English regions although the rates of inflation were again much lower than for input costs.

The latest data pointed to faster rises in business activity in the East of England and the East Midlands with the rates of expansion the highest for 51 and 35 months respectively.

The slowest increases in output were in the South West and North East.

Higher levels of business activity were supported by increased volumes of new work in all nine English regions.

Analysis points to a particularly marked rebound in new work received in the manufacturing sector although firms generally noted that underlying client demand remained fragile.

By region, the North West recorded the strongest improvement in new orders followed by the East of England.

Yorkshire saw business activity fall to a two month low.

Private sector labour market conditions remained fragile during the period. Despite six of the nine areas reporting an increase in employment number the rate of improvement was only modest.

The East Midlands was a notable exception as resurgent jobs growth in the manufacturing sector contributed to the fastest rise in overall workforce numbers for almost thirteen years.

Meanwhile, London, Yorkshire and the North West recorded falls in staffing levels following moderate growth in April.

Speaking on behalf of all RDAs Nigel Jump, chief economist for the South West RDA, said: “The manufacturing industries continue to make progress, particularly in regions with a strong export base.

“This is an important element of the need to rebalance the UK economy. The overall results of this latest survey, however, indicate some loss of forward momentum.”

He continued: “Hopefully, this reflects domestic political uncertainty that will fade, but there is also less confidence in Europe and the financial markets. The risk that the recovery is weakening is one that the regional PMI will help us to assess over the next few months.”