Businesses in England and Wales saw decrease in output
Uncertainty in the aftermath of the EU referendum hit demand, causing new orders to plunge. The Lloyds Bank Regional PMI, or Purchasing Managers’ Index, is the leading economic health-check of UK regions.
It is based on responses from businesses in the manufacturing and service sectors about the value of goods and services produced during July compared with a month earlier. England’s PMI dropped from 52.5 in June to 47.4, its lowest since April 2009.
A reading below 50 signifies contraction, and the greater the divergence from the 50 mark, the greater the rate of decline.
The largest decreases in business activity were in London (44.4), the South East (45.5) and the North East (46.0). Only the East of England (51.0) and the East Midlands (50.9) maintained positive output growth, though rates of expansion slowed.
Wales’ economy showed some degree of resilience, with the PMI registering 49.9 and thereby signalling virtually no change in the level of business activity from the month before.
The broader downturn reflected a big drop in new orders that was the largest seen since early 2009, but not at the same levels seen at the height of the financial crisis.
Meanwhile, July saw the end of a strong run of employment growth stretching back to the start of 2013 but with only a minimal impact on the labour market and modest job losses recorded.
Adding to the overall picture, the survey showed businesses’ costs pressures rising on the back of a weaker sterling. ■