The Covid-19 pandemic and lockdown is still taking a huge toll on businesses in the East of England as companies cut jobs to survive, a new survey has shown.
The latest NatWest East of England Business Activity Index for May showed a further sharp reduction in new business during May. While the reduction eased from April’s record low, it was still among the sharpest declines in the history of the PMI study.
The headline index - where any number below 50 shows the region’s economy is shrinking - stood at 33.4, an improvement on the 16.2 in April.
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Private sector firms in the region reported a further sharp reduction in new business during the month.
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Optimism for the next 12 months also weakened in May. NatWest said firms in the East were “anticipating a slow recovery ahead even as lockdown restrictions are gradually relaxed” - and sentiment in the East was more downbeat than the national average.
The region also saw private sector firms reducing their headcounts, with many of those responding to the survey saying they had had to make redundancies. While the rate of job losses was slower than April, it was still the second-quickest on record
John Maude, from the NatWest Midlands & East Regional Board, said: “Private sector firms in the East of England recorded a further reduction in business activity during May, following a record contraction in April. The COVID-19 pandemic continued to severely impact demand, with new orders falling at a slower but still substantial rate.
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"Facing rising spare capacity, firms reduced staff numbers again in the middle of the second quarter. Business expectations remained subdued, with worries centred on the longer-term impact of the pandemic on economic activity.
“Overall, May survey data pointed to a significant downturn in the East of England’s private sector. Despite the prospect of further easing of COVID-19 related restrictions, weak demand may hinder any recovery in the coming months.”