The South West economy performed well in 2006 with employment growth recovering strongly, indicating a steady expansion of jobs, according to a survey from the Royal Bank of Scotland.

For December, the RBS data showed that the South West economy ended 2006 on a strong footing. The rate of growth in business activity recovered the level of the survey high recorded in June and employment growth reached a new record level. “Overall growth was underpinned by the strongest increase in new business volumes for more than two-and-a-half years,” the survey said.

The business activity index recorded an average of 57.7 indicating robust growth throughout the year. Employment growth recovered strongly from 2005 (49.3) with the employment index averaging 53.9 (second only to London) and indicating a continued, steady expansion of jobs. 

Greater staff numbers and higher output levels contributed to a decline in South West firms’ backlogs of work. Outstanding business fell in five of the past seven months.

During December, the rate of input price growth remained sharp but was down on November and below the average rate for 2006 as a whole.

Companies continued to comment on higher raw materials prices and energy costs, despite crude oil prices remaining below the summer highs.

Greater input costs contributed to a robust rise in firms' output charges. Prices charged have now increased in each month for the past three years.