by business editor Trevor Sturgess

Private sector jobs in the south east fell last month as business activity lost its bounce, a survey has found.

The main decline came in the service sector as jobs in manufacturing continued to rise.

The Government is banking on job creation in the private sector to compensate for public sector job losses.

In a report by Markit for the South East England Development Agency (SEEDA) - soon to be axed by the Government - business growth across Kent and the South East has slowed.

While total activity growth was maintained for the fourteenth month in a row, the rate of expansion was the slowest in 14 months, and slightly weaker than the UK average.

Firms faced higher bills as inflation accelerated for the first time since April, and remained greater than the long-run series average.

The survey found that price rises were marked in metals, plastics, timber and oil.

Prices charged by private sector firms rose at the fastest rate since October 2008.

Paul Lovejoy, SEEDA executive director, said: "The latest survey evidence shows that the bounce in business activity and demand in the South East seen earlier this year has not been sustained during the summer, with growth in business activity and new orders faltering further in August.

"Against a background of weakening businesses activity and persistent spare capacity in the economy, in particular in services, it is less surprising that, after four months of growth, private sector employment growth has levelled off in August.

"Whilst it is encouraging to see that manufacturing is holding up relatively well, what we also need is a stronger recoverin in service sectors across the region."