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Record rise in new activity in the region as inflation picks up

Business activity in the region rose at the fastest rate in almost 25 years in May as restrictions were eased and firms re-opened although costs and selling prices also rose sharply, according to a key survey of purchasing managers.

The NatWest East of England PMI business activity index rose to 64.0 in May, up from 61.0 in April, as new orders rose for the third month running and at the sharpest rate for seven and a half years. Although private firms in the region were less confident of higher activity levels in 12 months’ time, they recorded another rise in staffing levels as stronger demand encouraged businesses to recruit. Manufacturers saw a steeper increase in hiring than services firms.

The level of outstanding business at firms in the East also rose in May. However average costs faced by firms in the region rose for the 12th month running in May and the rate of inflation was sharp and often linked to higher raw material and transport costs. Selling prices also rose in May as output price inflation reached a high for the 25 year series.

John Maude, NatWest Midlands & East Regional Board, said: "Latest PMI data revealed another record improvement in business activity across the East of England in May, as the further easing of virus-related restrictions supported a marked upturn in sales. The sustained surge in demand made it difficult for some firms to meet their commitments, with capacity pressures continuing to emerge. However, a further acceleration in the rate of job creation suggests companies remain committed to clearing their backlogs.” He added: “Until restrictions and bottlenecks ease across the globe, we can expect supply and inflationary issues to persist.”

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