South West economy sees strong end to 2016

The South West economy grew at one of the fastest rates in the UK during December, with business activity and the number of new orders rising sharply, according to the latest Lloyds Bank Regional PMI.

The South West PMI® rose to 58.7 in December, up from 56.6 in November. A PMI reading above 50 signifies growth in business activity.

Data for December also showed that employment rose for the sixth month running, supported by an increase in new business orders.

Despite this, input costs – including rent, raw materials and utilities - continued to rise, and firms passed on part of their higher cost burdens to customers by increasing prices for their products and services.

The Lloyds Bank PMI, or purchasing managers’ index, is the leading economic health-check of UK regions. It is based on responses from manufacturers and services businesses about the volume of goods and services produced during December compared with a month earlier.

David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking, said: “The South West ended 2016 as one of the fastest-growing UK regions, with total output and new work both expanding at the sharpest rate since mid-2014.

"The weaker sterling continues to cast a shadow across the region’s economic outlook, yet for the time being it seems firms haven’t been deterred from taking on more staff, with workforces increasing in December.”