Source - www.southwestbusiness.co.uk - 15/06/2010 - 10.05am

FURTHER growth in business activity in the South West during May has been signalled by new survey data.

But the latest expansion shown by the Markit/Regional Development Agency purchasing managers' index (PMI) was the weakest in the current 13-month period of growth and slower than the UK as a whole.

The headline seasonally adjusted Business Activity Index, which measures the combined output of the region's manufacturing and service sectors, posted 52.8, down from 56.0 in April. Readings above 50 signal expansion and those below 50 indicate contraction.

Continuing the trend from previous months, the manufacturing sector predominantly drove the overall rise in business activity.

May data signalled the slowest rise in new orders received by companies in the South West since January. Nonetheless, growth in new orders has now been maintained since October 2009. The latest rise was largely driven by stronger intakes of new work within the manufacturing sector.

Meanwhile, employment in the South West increased during May for a third successive month. The rise in staffing levels was marginal, but stronger than that reported for the UK as a whole.

Backlogs of work fell further in May, and the pace of reduction was broadly unchanged since April.

Service sector firms reported a marked reduction in backlogs but manufacturers noted that outstanding business had increased due to a further rise in new orders and reports of delays in receiving new materials.

Shane Vallance, economics and evidence manager at the South West Regional Development Agency, said: "The new Government has highlighted the importance of the manufacturing industry to the economic recovery, so the rise in business activity in manufacturing shown by these figures is welcome.

"We will have to wait and see whether the slip in overall confidence noted in the survey reflected a degree of political uncertainty or a more fundamental weakening of conditions