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Business activity regains growth momentum in September

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Lloyds Bank Commercial Banking Yorkshire & Humber PMI® data recorded another month of growth for the region.

Improvements were seen in the growth rates of output, new orders and employment.

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 – rose from 57.3 in August to 59.8 in September, to equal July’s near 14 year high.

New orders growth also rebounded in September, following a slight easing in August.

However, incoming new business rose in Yorkshire & Humber at a slightly slower pace than recorded for the UK as a whole.

Respondents largely attributed the latest increase to increased promotional activity, and a rise in foreign demand.

Employment rose for the fourth consecutive month in September, and at the fastest rate since January.

That said, like new orders, the pace of growth was marginally below that registered for the UK as a whole.

Backlogs of work increased for the fourth successive month in September, but the rate of accumulation was the weakest for three months.

The latest rise was largely attributed by panellists to a combination of increased new order volumes and pressure on operating capacity.

Input prices rose for the thirteenth successive month in September but the pace of inflation eased marginally from August’s two-year high.

Respondents cited increases in raw material prices, in particular oil and solvents, while some cited rising insurance and accountancy costs as the key drivers of September’s cost inflation.

Output prices rose in the Yorkshire & Humber private sector for the fifth successive month, and at the sharpest pace since June 2011.

The rate of inflation in prices charged in the region was sharper than that recorded for the UK private sector as a whole.

Martyn Kendrick, area director SME Banking in Yorkshire, Lloyds Bank Commercial Banking, said:

“Yorkshire & Humber’s private sector saw an impressive conclusion to an exceptionally strong third quarter last month.

“Though exceeded marginally by the average UK growth rate, the rate of expansion over the quarter was the strongest since the final quarter of 1999.

“New order growth followed a similar pattern, matching July’s nine-year high, while employment levels rose at the fastest pace for eight months.

“The improvement in employment growth from August’s five-month low was largely unsurprising given the recent accumulation of backlogs, and as levels of outstanding business rose again in September, staff numbers look set to continue to rise.”

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