Wintry weather slows down growth

The heavy snow led to slower output growth among private firms in the majority of regions in England during December, research indicated today.

The severe winter weather contributed to companies in six out of the nine English regions posting weaker rises in business activity during the month, according to Lloyds TSB. Its report said the slowdown was centred on the service sector, with a number of companies saying the bad weather had an adverse impact on demand at the end of 2010.

But the manufacturing sector continued to see a strong recovery during December, helping the West Midlands top the regional growth table for the first time since September 2007. At the other end of the scale, the weakest performing regions were the North West and South East, where business activity increased only marginally during the month.

John Maltby, managing director of Lloyds TSB Commercial, said: "Heavy snowfall had a substantial impact on regional business activity at the end of 2010, with the latest Purchasing Managers' Index (PMI) data suggesting that adverse weather conditions had a particularly disruptive impact on the service sector.

"Overall, the latest PMI figures indicate that regional business activity proved resilient in the final months of 2010, which will provide encouragement to SMEs looking to expand their businesses during the year ahead."

Lloyds TSB questioned 1,200 private manufacturing and service sector companies during December. The group said despite the bad weather, there were increased levels of business activity and incoming new work across all the English regions, suggesting the recovery in private sector business conditions remained on track at the end of the year.

Jobs growth was also recorded in all English regions outside of London and the South East, driven by rising workloads and stronger underlying demand. Yorkshire and the Humber and the North East saw the biggest increase in employment, partly due to the manufacturing-led recovery in these areas. 

But inflationary pressures intensified in December, with higher fuel and raw material prices increasing costs.

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