The south west private sector economy registered a weak rise in output in March, according to PMI survey data.
Business activity expanded at the slowest rate since April 2013, and growth was weaker than all other UK regions surveyed except Scotland and the north east, which both saw contractions.
The south west also registered a softer rise in new business, and a further decline in backlogs. More positively, employment growth remained relatively solid. Latest survey data also highlighted a pick-up in inflationary pressures, most notably for output prices which increased at the fastest rate since February 2014.
The seasonally adjusted Lloyds Bank Commercial Banking South West Business Activity Index fell to a 35-month low of 51.2 in March, from 52.6 in February.
The latest figure was also below those signalled for all other UK regions except Scotland (48.5) and the north east (49.5), signalling only a weak rate of output growth. In comparison, the Index has trended at 54.1 since the series began in January 1997. That said, business activity has risen continuously since April 2013.
The underlying weakness of business conditions in the private sector was emphasised by data on new business inflows, which increased only fractionally in March. In line with the trend for activity, the south west registered the slowest growth among the ten regions to record expansion.
The main positive finding from the latest survey was a further solid rate of growth in private sector employment. The pace of job creation hit a three-month low but was strong in the context of historic data, in line with the UK trend and broad-based across manufacturing and services.
Rising employment and slower new business growth helped companies keep on top of workloads in March. Backlogs declined for the third successive month, and at the fastest rate since last October. Manufacturing posted an especially strong pace of contraction.
Average input prices rose for the second month running in March, and at a faster rate. This was despite another drop in manufacturing purchase prices during the month. Meanwhile, prices charged for goods and services increased at the fastest pace since February 2014.
Commenting on the Lloyds Bank Commercial Banking South West PMI survey, David Beaumont, regional director, SME Banking, South West, Lloyds Bank Commercial Banking, said: “The main PMI activity indicators told a story of subdued business conditions in the South West private sector in March.
“Output growth slowed further, while the near-stagnation in new business suggests ongoing weakness as we move into spring. The main positives from the latest survey were ongoing job creation and higher output prices, but these trends will be put in jeopardy if demand does not pick up.”