East Of England positive growth forecasts remain

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 tenth month running. The Index fell sharply from August's 28-month high of 53.9 to 50.9, however, indicating only a marginal rate of expansion.

Private sector companies in the East of England reported a rise in the volume of incoming new business for the third month running in September, completing a full quarter of growth following a downturn in the second quarter. But the rate of expansion slowed to a marginal pace in the latest period.

Workforce numbers across the East of England's private sector fell for the first time in four months in September. Where staffing levels decreased, this was linked to delays replacing leavers, reduced hours, automation and cutting part-time or temporary roles.

Cost pressures across the East of England's private sector picked up in September, remaining strong overall. Wages and shipping were the primary drivers of rising costs, while there were some reports of lower fuel prices.

Businesses in the East of England maintained positive growth forecasts for the next 12 months in September, linked to lower inflation and interest rates spurring higher consumer confidence and better trading conditions, a pick-up in the property market and new products. That said, the strength of sentiment was the weakest since the end of 2022, and below the long-run series trend.

Lisa Phillips, Regional Managing Director, Midlands and East, Commercial Mid Markets:

"It is positive to see that, as we enter Q4, businesses in the east of England remain confident for 2025.

“However, after a strong performance in August, the September survey results weakened across the board, with growth of activity and new work softening, employment declining and the outlook turning less positive. Compounding these developments, price pressures rose during the month, but at least remained well down on the trends over the last three years.

"Whether the loss of momentum in September is merely a correction following a pretty strong August remains to be seen. During the third quarter as a whole the Business Activity Index trended at 51.9, even slightly above the figures for the first (51.7) and second quarters (51.8). But the weaker New Business and Future Activity Indices are pointing to a slowdown in the fourth quarter, especially as firms will have to wait until at least November for another cut in interest rates and any boost to confidence that would bring."

Performance in Relation to UK

The latest Business Activity Index for the East of England was among the lowest of the 12 UK nations and regions monitored, ahead of only Wales (48.6) and Yorkshire & Humber (50.4). Similarly, new business growth was the joint-weakest across the UK (with Scotland). A number of firms reported delays in completing new contracts due to hesitant clients.

Among the 12 UK nations and regions, only Scotland, Northern Ireland and the North East recorded softer confidence than the East of England.

The rate of job shedding was only marginal, but the most notable in 2024 so far. The East of England was one of five English regions plus Wales to record lower staffing in September, although the UK as a whole continued to register growth.

Outstanding work in the private sector continued to fall in September, as has been the case every month since May 2022 except for a brief increase in February 2023. The rate of backlog depletion eased to the slowest since April 2023, but remained faster than the UK average.

The rate of input price inflation picked up from August's 45-month low, moving back above the long-run survey average. But it remained among the weakest levels registered over the past four years, during which time the Input Prices Index has trended at 69.5.

The faster increase in average input costs was passed through to end prices in September, with the rate of charge inflation accelerating for the first time in three months and remaining strong in the context of the series history.

Both price indices for the East of England were broadly in line with the UK figures in September.