Activity expands at strongest rate in over two years

Output of goods and services in the East of England rose at the fastest rate in over two years in August, according to the latest NatWest Growth Tracker data. The NatWest East of England Growth Tracker Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – remained above the no-change mark of 50.0 to signal growth of output in the region for the ninth month running. The Index rose sharply to 53.9, from July's 51.0, indicating the fastest rate of expansion since April 2022. The latest figure was also broadly in line with the UK average (53.8). Workforce numbers across the East of England's private sector rose for the third month running in August. Companies stepped up hiring efforts to accommodate new and expected workloads. Moreover, the rate of job creation was the fastest since July 2023 and stronger than the long-run survey average. Both input and output prices rose at the slowest rates in over three years. Reduced cost pressures were passed through to end prices in August, with the rate of charge inflation easing to a 44-month low. Moreover, the rate of inflation eased for the second consecutive month, the first back-to-back fall in the Output Prices Index in 2024 so far. It registered in line with its long-run trend level of 53.6. Dipesh Mistry, Chair of the NatWest Midlands and East of England Regional Board: "A sustained increase in new business drove the fastest expansion in total activity in the East of England in over two years in August, as the region caught up with the UK as a whole. The volume of outstanding business continued to decline, however, as companies expanded workforces at the strongest rate for over a year. "Promisingly, there was further evidence of price pressures receding as charge inflation hit a near four-year low and fell in line with its long-run trend level. This, and the knock-on impact of lower interest rates, underpinned strong confidence regarding the 12-month outlook. Expectations continued to run relatively high despite easing since July." Performance in relation to UK For the first time in five months, the East of England outperformed the UK trend for employment. Increased staffing numbers in August were partly targeted at reducing levels of outstanding business. Backlogged work fell at a faster rate, and one that outstripped both the average over the past two years and the UK-wide trend for August. Demand conditions across the East of England's private sector economy strengthened in August, as the volume of incoming new business increased for the second month running and at the fastest rate since April 2023. Companies reported new product launches, new international clients and sales enquiries coming to fruition. That said, demand growth remained softer than the UK trend. Businesses in the East of England remained optimistic about growth prospects in the coming year during August. The degree of optimism was weaker than in July and compared with 2024 so far on average, but it remained above the long-run series trend. Growth forecasts were linked to lower interest rates and inflation, greater political stability, new products, international demand, acquisitions, branch expansions and stronger conditions in the property and construction sectors. Cost pressures across the East of England's private sector slowed in August. The rate of input price inflation moderated to a 45-month low and moved below the long-run survey average. Wages and shipping were the main reported sources of rising costs in the latest period.