Business activity in the East of England private sector grew at the fastest rate in six months in September, helped by an increase in new work although employment fell for the first time in nearly a year, according to a survey of purchasing managers.

The seasonally adjusted Lloyds TSB East of England business activity index rose to 53.7 from 51.6, the second monthly increase in a row and above the UK average. The survey highlighted anecdotal evidence pointing to an improvement in general demand conditions and the start of new client projects as drivers of the increase in new business.

East of England private sector firms reported an- albeit moderate - drop in employment for the first time in ten months during September with reports of voluntary leavers not being replaced. Outstanding business fell further in September, pointing to the continued existence of spare capacity at the region’s companies and the rate of cost inflation moderated since August.

Steve Elsom, area director for Lloyds TSB Commercial in East Anglia, said: “The rebound in business activity among firms in the East of England continued in September, following the weakness seen around the middle of the year, with output growth reaching a six-month high. The increase in activity came despite the first fall in employment in ten months. The divergent trends in output and employment suggest some companies may have targeted productivity gains due to the continuing fragility of the economic recovery.”