Sterling holds steady after terrible week, as firms warn that low pound will boost exports but firms deliver steep rise in import costs
- England’s PMI was 54 in September, its highest reading since January
- Solid growth in the West Midlands and Yorkshire & Humber
- Wales outperformed all English regions, with its PMI at a 15-month high
Firms in England and Wales reported a rise in output last month due to growth in new orders and employment.
The weaker pound in the wake of the EU referendum has made UK goods cheaper but firms are feeling the impact of higher import costs, figures from the latest Lloyds Bank Regional Purchasing Managers’ Index show.
The pound was holding steady against the US dollar this morning, after being hit last week when it dropped from around $1.30 to $1.24 and suffered a flash crash overnight between Thursday and Friday.
Export boost: But firms are feeling the impact of higher import costs
At 10am this morning, the pound stood at $1.241, down 0.2 per cent, and €1.110, flat against the euro.
The survey measured the value of goods and services produced during September against the figures from the previous month.
A reading above 50 signifies growth – England’s PMI was 54 in September, its highest reading since January.
However, the pound's weakness contributed to another steep rise in businesses’ input costs, which translated into higher prices charged for goods and services.
Tim Hinton, managing director of mid-markets and SME banking at Lloyds, said it was encouraging to see a positive end to the third quarter after weaker activity in the early summer.
'The weaker pound remains a focal point in the survey data. Improved competitiveness has no doubt given added impetus to the post-EU referendum rebound, but increasingly businesses are feeling the impact of higher import costs.'
Business activity rose across all regions in England, led by solid growth in the West Midlands and Yorkshire & Humber.
Regional PMI: Business activity rose across all regions in England, led by solid growth in the West Midlands and Yorkshire & Humber
The weakest performer was the South East, where output rose only modestly and at a slower pace than in August.
Wales also saw a rise in business activity in September and outperformed all English regions, with its PMI reading at a 15-month high of 56.2.
Firms in England and Wales created more jobs to make up for the growth in new orders and confidence, which has bounced back after diving right after the Brexit vote.
However jobs growth in most regions remained weak relative to trends seen throughout 2015 and earlier this year, Lloyds said.
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