Business activity growth accelerates to four-month high

Growth in business activity at private sector firms in the Yorkshire & Humber region accelerated in February, having eased in each of the previous five months.

This was supported by a further expansion in new work intakes. Subsequently, staff numbers continued to rise at a marked pace. Meanwhile, cost pressures resumed, as input prices increased, although at a weaker rate than the UK average.

The seasonally adjusted Lloyds Bank Yorkshire & Humber Business Activity Index posted at 57.5 in February, up from January’s 22-month low (54.2), thereby signalling an improvement in business conditions at private sector firms in the Yorkshire & Humber region.

Furthermore, the latest expansion was faster than the UK-wide trend for the first time since October 2014. Stronger Yorkshire & Humber activity growth reflected upturns in both the manufacturing and service sectors.

The expansion in business activity was supported by a further increase in new work intakes. The rate of growth was marked and broadly in line with the UK average.

Private sector firms hired additional staff for the twenty-first consecutive month in February. The rate of expansion was sharp and little-changed from the previous month, with firms associating employment growth with business expansions and stronger demand conditions.

Despite a rise in workforce numbers, backlogs of work accumulated in February. Although only moderate, the rate of growth was faster than the UK average for the first time in over one-and-a-half years. Surveyed companies commented on higher production requirements leading to pressure on capacity.

Inflationary pressures were evident at private sector companies in the Yorkshire & Humber region in February, as input prices increased amid reports of higher staff wages. However, the rate of inflation was only modest and slower than the UK average.

Meanwhile, charges increased at a slightly faster rate in February. According to anecdotal evidence, private sector firms increased their selling prices to improve profit margins.

Commenting on the Lloyds Bank Yorkshire & Humber PMI survey, Leigh Taylor, area director for SME Banking in the North East, Lloyds Bank Commercial banking, said:

“Private sector business activity growth in Yorkshire & Humber accelerated in February, having eased in the previous month to a 22-month low.

“The expansion in business activity was underpinned by a further rise in new work, with firms linking greater new order growth to success in gaining new clients from both domestic and international markets.”

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