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Business sentiment improves as firms look to return to normality

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Business sentiment improved in December and employment levels rose at a faster pace as private firms in the East of England stayed confident about higher activity levels in 2022, according to a key survey of purchasing managers. Hopes of a return to normality, new product launches and machinery upgrades underpinned optimism as staffing grew at the strongest rate since last summer to meet sutained higher demand.

The NatWest East of England PMI business activity index fell from 54.7 in November to 51.6 in December, signalling only a marginal uptick in business activity as Covid surged although the overall rate of expansion was solid. But firms saw an increase in operating costs for the 19th month running as wages, transport, materials and energy costs climbed.

The rate of output price inflation was the strongest in the series history in December, having picked up slightly from November's peak. John Maude, NatWest Midlands & East regional board, said: "December data revealed a slowdown in business activity growth in the East of England's private sector, with the latest uptick the weakest for ten months. Nevertheless, firms were optimistic that the effects of the pandemic will subside over the course of the new year. As such, there were stronger increases in headcounts with firms remaining committed to building their workforces.”

…whilst more capital investment planned as key to growth

A record 37 per cent of chief financial officers say increasing capital investment is a strong priority for their business in the year ahead and most expect to spend more on digital technology and workforce skills over the next three years, according to Deloitte’s UK fourth quarter CFO survey. Paul Schofield, South East practice senior partner, said: “Locally I am seeing many of our significant clients stepping up investment as they look to sustain acceleration away from the turbulence of the last couple of years. This includes some interesting M&A and restructuring activity in both public and privately owned companies, across most sectors; driven by the confidence that increasing demand, and investor willingness to support, has brought. I do see 2022 as being a strong growth year for companies in the East and South East”.

Last Updated ( Tuesday, 08 February 2022 09:17 )