Latest date from private firms in the South West have revealed new growth. fresh orders and more jobs as a result.
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 sharply from 48.9 in February, to 59.0 in March, signalling a renewed expansion in output, and one that was the fastest since last August.
Private sector firms reported renewed growth in new orders during the latest survey period, with the latest uptick the joint-strongest in over six years. According to panellists, the government’s 'roadmap out of lockdown' fuelled greater client demand and new contract wins in March.
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But they have also seen higher prices in raw materials, partly due to the shortages caused by the Suez Canal blockage in March.
Stuart Johnstone, Managing Director, London & South East, Corporate & Commercial Banking, said:
"March survey data welcomes a return to growth in the South East's private sector, with a substantial expansion in business activity recorded. The government's 'roadmap out of lockdown' fuelled sentiment, which in turn encouraged a surge in demand and output. Amid efforts to fulfil new orders firms increased their hiring efforts, although this was not enough to stop capacity pressures from arising. Promisingly, efforts to clear backlogs may prompt further increases employment over the next few months.
"On a more worrying note, inflationary pressures have been a common theme over the first quarter, with material shortages and delivery delays often blamed for the robust rates of inflation. Firms will hope, particularly in the interest of profit margins, that these supply-side disruptions will ease, but the Suez Canal blockage in March introduced another challenge for global supply.”
Overall, the pace of expansion was robust and among the strongest in the series.
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The increase in new business in the South East was sharper than the 海角视频 average.
Key Findings
Joint-fastest rise in new business since November 2014
Workforce numbers grow at robust pace
Sentiment improves to the strongest on record
March data revealed output expectations for the year ahead improved to the strongest since the index began in July 2012. Firms overwhelmingly linked hopes of growth to improved demand conditions and a return to normality following the coronavirus disease 2019 (COVID-19) vaccination programme.
Output expectations also improved at the 海角视频 level, although sentiment in the South East was stronger than the 海角视频 average.
Private sector firms in the South East recorded an increase in workforce numbers in March, thereby ending 13 consecutive months of job shedding. Survey respondents often associated the expansion to a surge in demand. The rate of job creation was marked overall, and the fastest since October 2015.
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Sub-sector data indicated that both service providers and manufacturers recorded growth in staffing levels.
Incomplete work accumulated by private sector firms in the South East rose solidly at the end of the first quarter, the first rise in backlogs in three months. The rate of expansion was marked, and the fastest since March 2015. According to panellists, delays in the receipt of inputs and higher sales contributed to the increase in outstanding business.
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Of the 12 海角视频 regions monitored, only the East of England and West Midlands recorded a quicker rise in backlogs.
March data indicated another sharp rise in average cost burdens faced by private sector firms in the South East, with the latest rise extending the period of inflation to ten consecutive months. The increase was the strongest in the aforementioned sequence, moreover, the quickest since February 2017. Panellists overwhelmingly linked higher prices to rising raw material costs, increased transportation costs and Brexit. Some firms also mentioned higher staffing expenses.
Sub-sector data indicated inflation was broad-based, although manufacturers recorded the sharper rise in input prices.
Selling prices charged by private sector firms in the South East rose at the end of the first quarter. Moreover, the rate of inflation strengthened for the third month running to the fastest since November 2017. Reasons for higher charges included the passing on of rising material and transportation costs. Overall, output price inflation was robust, and the sixth-sharpest in the series to date.
Selling prices in the South East rose at a quicker pace than that seen at 海角视频 level.