Lloyds Bank Commercial Banking Yorkshire & Humber PMI® data indicated that the sharp output growth seen over the summer months continued into August, though eased slightly from July’s recent peak.
Input prices recorded a twelfth successive increase and rose at the fastest pace for two years.
The headline Lloyds Bank Commercial Banking Yorkshire & Humber Business Activity Index – a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors – fell from 59.8 in July to 57.3 in August.
The index remained well above the 50.0 no-change mark separating growth from contraction, and indicated the tenth successive increase in business activity in the region.
New orders also continued to expand sharply in August, though the pace of growth eased marginally from July’s 9-year high.
Panellists largely attributed the rise to an increase in clients and larger export orders. A number also cited an expansion in domestic demand as a key driver.
Employment grew for the third successive month in August, though the increase was only fractional. Staffing levels across the UK as a whole rose at a marginally faster pace than in Yorkshire & Humber.
Respondents in the region suggested increased production and client numbers were the main drivers of cost inflation.
Backlogs increased for the third successive month in August, and at the fastest pace since the series began in November 1999.
Panellists attributed the rise in business outstanding to increased order volumes and an unanticipated spike in demand.
Input prices rose for the twelfth consecutive month in August, and at the fastest pace in two years.
Higher import costs, caused in part by the weak pound, and a rise in fuel prices were commonly cited by panellists as the key factors driving cost inflation. Charges rose for the fourth consecutive month in Yorkshire & Humber.
The rise in input prices was the sharpest in just over two years and marginally faster than in the UK as a whole.
Martyn Kendrick, area director SME Banking Yorkshire, Lloyds Bank Commercial Banking, said:
“The sharp pace of private sector expansion seen since the spring continued into August across Yorkshire & Humber.
“The rate of growth slowed from July’s record high and was lower than that recorded for the UK overall, which rose at a pace not seen in 16 years.
“However, business activity in Yorkshire & Humber remained strong and the region continued its ten-month sequence of growth.
“Despite the sharp increases in activity and new orders, job creation slowed in August, but the third successive rise in backlogs indicates that spare capacity is declining in the wake of strong activity growth, and if production and new orders continue to expand at the current pace, it cannot be long before employment follows suit.”