East Midlands economy strengthens at start of second half year7 August 2011
The East Midlands economy continued to strengthen at the start of the second half of the year, says an influential survey.
The Lloyds TSB East Midlands Purchasing Managers Index said the trend with both output and new business continued to rise during July while companies took on extra staff at a marked pace.
The index reports signs that cost-inflationary pressures eased.
The headline seasonally adjusted index which measures the combined output of the region's manufacturing and service sectors rose to 54.9 in July from 54.0 in June, indicating that output in East Midlands companies increased at a marked pace.
Moreover, the rate of growth accelerated from the previous month, and was faster than the average seen across the UK economy as a whole.
Services companies recorded a stronger rise in activity than the manufacturing sector.
Where output rose, firms mainly linked this to higher new orders.
New business increased for the 22nd consecutive month in July with firms highlighting improved client demand. Although faster than June, the rate of expansion in the region was slightly weaker than across the UK as a whole.
Companies attempted to catch up on outstanding workloads in July leading to a marked reduction in backlogs.
The rate of depletion of work in hand was the steepest since September 2009 and faster than the UK average.
Higher demand led to a further increase in employment at East Midlands firms.
The rate of job creation remained strong, reports the index, only slightly below the series record.
Employment increased at marked rates across both the manufacturing and service sectors.
Input prices still rose substantially over the month, reflecting higher energy and raw material costs.
Manufacturers recorded stronger input price inflation than the service sector.
The report identified attempts to pass on increased input costs to customers leading to another rise in output prices in July.
Roger Galbraith, area director for Lloyds TSB Commercial in the East Midlands, said: "The trend in employment remains particularly impressive, with another near-record increase in July. A further softening in the rate of input cost inflation will be another welcome sign for firms in the region."