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Rising cost inflation takes shine off surge in new activity

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New private business activity and business optimism surged upwards in the region in March although firms also faced a marked increase in costs, according to a key survey of purchasing managers. The NatWest East of England business activity index leapt from 49.0 in February to 60.9 in March, one of the sharpest rises in the 24 year history of the series. Firms benefitted from higher sales often linked to the easing of virus restrictions.

Only one region, Yorkshire & Humber, saw a steeper rate of new order growth than the East and business optimism linked to hopes of continuing recovery in demand was the strongest since the data was first collected in 2012. Firms are continuing to recruit with manufacturers seeing stronger growth in staffing numbers than service providers. But private firms faced the sharpest rise in average costs for four years which extended the period of inflation seen to ten months. Higher wage costs, supplier shortages and increased transport prices were all cited as having driven up expenses in March. Manufacturers saw a sharper rise in costs. Prices charged by firms in the East also rose in March as higher material costs were often passed onto clients.

John Maude, NatWest Midlands & East regional board, said: "After a difficult start to 2021, March survey data reveals a substantial rebound in activity….Nevertheless, many firms eagerly await the next phase of the reopening in April. However, demand and output still have a long way to recover to make up the ground lost during the pandemic."

Last Updated ( Tuesday, 13 April 2021 09:30 )