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Rising inflation and work backlogs take the shine off business upturn

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Businesses in the East of England are facing mounting cost inflation and growing backlogs of work despite recruiting new staff at record levels, according to a key survey of purchasing managers.

Meanwhile, a surge in new orders has made it difficult for some firms to complete new work and the backlog of outstanding business has risen for a fifth month running. The NatWest East of England PMI® survey showed that input price inflation touched a record high in June since the series began, driven by higher fuel, material, wage, PPE and transport costs. The rate of price increases charged by private firms in the region also hit a new record in June, as firms saw an increase in new orders for the fourth month running.

Meanwhile the pace of staff recruitment rose for the fourth month running to a five-and-a-half-year high as both services firms and manufacturers firms reacted to greater client demand and shortages of workers. Although the business activity index dipped to 62 in June from 64 in May, the survey said growth in the region remained robust overall and was broadly in line with the UK average. Positive sentiment amongst firms on output in 12 months time moderated but remained above the long-run series average.

John Maude, NatWest Midlands & East regional board, said:"Despite further efforts by local businesses to increase headcounts, backlogs rose at the quickest pace on record, suggesting firms are likely to continue adding to their workforces to alleviate capacity pressures. For now, both the manufacturing and service sectors seem to be gearing up for another busy period, as we head into the third quarter of 2021 and await the further relaxation of measures.”

Last Updated ( Tuesday, 27 July 2021 06:32 )