Firms across the South East have recorded strong growth as lockdown restrictions eased throughout April with encouraging signs that it is the start of an upward trend.
Latest 海角视频 regional PMI® data from NatWest has revealed a sustained expansion in new orders placed at private sector firms across the region - the sharpest uptick in more than seven years.
Firms have linked the surge to the relaxation of COVID-19 measures and the reopening of operations for clients.
But there is concern about the price of raw materials pushed by limited availability because of the pandemic.
Stuart Johnstone, Managing Director, London & South East, Corporate & Commercial Banking: "Boosted by easing virus-related restrictions in both domestic and international markets, firms in the South East recorded robust growth in output during April. The uptick was among the sharpest in the series as businesses and their clients continue to reopen after what was a lengthy period of closure. Moreover, a convincing expansion in headcounts leads us to believe this is just the start of the recovery with restrictions easing further in May.
"An area of growing concern, however, is the inflationary pressures which have built especially over the last few months. The pandemic has had severe repercussions on raw material availability and global supply-chains. Firms will hope these issues are soon resolved but realistically, we are likely to see sharp price pressures and transportation bottlenecks persist until COVID-19 measures ease across the globe."
The headline NatWest South East Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – rose from 59.0 in March to 61.4 in April, signalling a back-to-back expansion in the South East's private sector.
At the sector level, expansion was broad-based. Manufacturers recorded a noticeably quicker increase in new work than service providers, however.
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Fuelled by greater output and new order volumes, private sector firms in the South East remained widely upbeat about their growth prospects for the year ahead. The degree of optimism was the second highest on record, surpassed only by that seen in the previous survey period. The easing of virus-related restrictions and greater international demand also supported optimism in April.
Private sector firms in the South East added to their staffing levels in April, extending the period of job creation to two consecutive months. The rate of growth was marked, and the strongest since February 2015. According to panel members, expectations of greater demand following the further relaxation of COVID-19 restrictions encouraged firms to add to headcounts.
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Private sector employment also rose across the 海角视频 as a whole, although at a slower pace than in the South East.
Adjusted for seasonal influences, the Outstanding Business Index posted above the 50.0 neutral value for the second month in a row. The rate of expansion was solid but eased slightly from that in March. Capacity pressures were often linked to a surge in demand and shipment delays.
At the sector level, goods producers noted a much quicker rise in incomplete work than service providers.
Average cost burdens faced by private sector firms in the South East rose at the start of the quarter, as has been the case since last June. Moreover, the rate of inflation quickened to the sharpest since August 2008 and was the fifth-strongest in the series. Respondents often mentioned higher staff, raw material, and transportation costs while others linked higher prices to material shortages.
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Sub-sector data indicated manufacturers recorded a much sharper rate of inflation than service providers.
April data highlighted another robust rise in selling prices charged by private sector firms in the South East. The rate of inflation was in line with that seen in the previous survey period and was marked overall. Panellists linked the increase to the partial pass-through of higher input costs.
Average selling prices rose at a quicker rate in the South East than that seen across the 海角视频 as a whole.