by business editor Trevor Sturgess

The South East underlined its reputation as the UK's economic powerhouse with a boost in manufacturing and services output last month.

Job growth also continued but concerns remain over rising prices and weaker order growth.

Business activity grew faster than the UK average in May, according to a Markit Economics report for the South East England Development Agency (SEEDA).

It showed that the regional economy continued its rebound in private sector activity for the 11th month in a row.

The figures, based on evidence from purchasing managers, show a steep rise in activity in May, and stronger than most parts of the UK.

New orders have risen every month since July last year, although the rate of growth in the latest period was the weakest since September.

There was jobs growth in both manufacturing and services for the second month running, mainly due to rising workloads and new clients.

However, rising costs could slow the revival.

Many businesses faced higher costs, especially in metals, timber and oil-related products, Average input costs went up for the eighth month in a row, and at the second-fastest rate since September 2008.

However, the rate of cost inflation was weaker uin the south east than the rest of the UK.

Paul Lovejoy, SEEDA executive director, said: "It is encouraging to see that the South East economy continues to improve, as indicated by a further strong rise in business activity in May, which has been supported by another rise in recruitment activities.

"The fact that the region's economy grew at a relatively strong rate compared to the rest of the UK, shows that the South East is able to build on its strengths as the UK's economic powerhouse.

"Services activity, which forms the largest part of the economy, continued to expand at a rate above the historic trend.

"However, continued increases in input prices could slow the revival, especially for manufacturing companies."