Growing disparity in output across the regions

The gap between the fastest and slowest growing English regions widened further in June, according to the latest Lloyds TSB regional Purchasing Managers' Index, published today.

There was robust output growth in London, the South-east and the Midlands but only marginal rises in business activity across most other regions, Lloyds said.

The South-west was the weakest performing region, experiencing the slowest growth since the spring of 2009. Meanwhile, the Yorkshire and Humber region and the North-east both posted only slight rises in private sector business activity.

John Maltby, the managing director of Lloyds TSB Commercial, said: "June's survey highlights that regional output growth softened on average in the second quarter, with Yorkshire and Humber seeing the sharpest slowdown and only the East Midlands bucking the overall trend."

He added that the latest figures showed widening disparities in growth momentum across the regions. "London is accelerating into the fast lane while the pace of recovery has slowed to a crawl in the South West, Yorkshire and Humber and the North-east," he explained.

But although they followed divergent paths in terms of growth, the regions were united when it came to the moderation in the pace of price rises. Input cost inflation, eased across all nine English regions, according to the survey, and, in each case, fell to its lowest level since the final three months of last year.

"Cost inflation is now well below its 2011 peak in every region, and this positive development is likely to filter through to slower output price rises in the months ahead," Mr Maltby said. "The moderation of cost inflation offers hope that profitability may be maintained, supporting investment by firms with growth prospects."

Along with a slowdown in activity, the Yorkshire and Humber region also saw a small reduction in staffing levels. The other eight regions, however, saw increased employment, with the West Midlands heading the table in terms of jobs growth thanks to a boost from manufacturing.

In a reflection of the sluggish pace of new business, backlogs of work declined across the majority of the English regions last month. The fastest rates of reduction were seen in the North West and, once again, in Yorkshire and Humber.