Wednesday 08th July 2020
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Speed of downturn slows but firms braced for slow recovery

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The pace at which private sector activity fell in the region slowed dramatically last month although confidence remains subdued and firms are expecting a slow recovery as lockdown restrictions are relaxed, according to a key survey of purchasing managers. The NatWest East of England business activity index rose from a record low of 16.2 in April to 33.4 in May, although any figure below 50 still signals a fall in output. Firms in the East saw a further sharp reduction in new business during May – and despite easing markedly from April - the decline was still among the fastest on record.

Order book volumes also fell and backlogs of work among both manufacturers and services firms fell steeply. Business expectations on future activity wakened slightly although firms still expect growth over the next 12 months. Headcounts were reduced, reflecting a rise in spare capacity. Despite slowing from April's record fall, the reduction was the second-quickest on record and whilst job cuts tended to involve redundancies the East saw a slower drop in employment than the UK average.

John Maude, NatWest Midlands & East regional board, said: “Overall, May survey data pointed to a significant downturn in the East of England’s private sector. Despite the prospect of further easing of Covid-19 related restrictions, weak demand may hinder any recovery in the coming months.”