The region's economy is continuing to grow albeit at a slower rate but businesses in the region are worried about the long term impact of the eurozone crisis, two recent surveys suggest.
The headline seasonally adjusted Lloyds TSB East of England business activity index fell to 52.3 down from 53.4 suggesting the rate of growth slowed for the third month running to the weakest since last November. New business fell fractionally in the East of England during May, ending a six-month period of rising new orders and in contrast to the UK picture. Activity and new orders increased at service providers, but fell at manufacturers
The recovery in the region’s economy lost momentum in May as new business decreased fractionally and growth slowed, although employment continued to increase according to a survey of purchasing managers.
The headline seasonally adjusted Lloyds TSB East of England business activity index fell to 52.3 down from 53.4 suggesting the rate of growth slowed for the third month running to the weakest since last November. New business fell fractionally in the East of England during May, ending a six-month period of rising new orders and in contrast to the UK picture. Activity and new orders increased at service providers, but fell at manufacturers.
However employment rose in May with higher staffing levels recorded at both manufacturers and services companies. Meanwhile, the rate of input cost inflation eased for the second successive month in May, but remained solid and sharper than that seen across the UK as a whole.
Steve Elsom, area director for Lloyds TSB Commercial in East Anglia, said: “While the slowdown in activity growth across the East of England during May was in line with that seen at the wider UK level, a concerning aspect of the latest survey was the first drop in new business since October 2011.”
Eurozone worries
Short-term business prospects have improved but the eurozone crisis has cast a shadow over longer-term growth prospects, according to a report by BDO LLP. BDO’s output index, which predicts gdp one quarter ahead, climbed to 96.7 in May from 95.8 in April, an increase for the third month running. But its optimism index has dropped for the third consecutive month, from a peak of 98.0 in February to 95.5 in May. It suggests that UK businesses expect growth to tail off later in 2012.
Richard Kelly, partner and head of BDO in the East, said:" The biggest issue for businesses at the moment is that the strength of the pound against the euro has made UK exports much more expensive, significantly denting export and growth prospects."