Business activity at Yorkshire & Humber private sector firms increased at a sharper rate at the start of 2016. Supporting this was a faster expansion in new orders. However, in both cases, growth remained below the UK averages. On a less positive note, employment growth slowed to a 26-month low. On the price front, input prices decreased further, while charges were unchanged.
At 55.1, up from 52.5 in December (the lowest reading in nearly three years), the seasonally adjusted Lloyds Bank Yorkshire & Humber Business Activity Index signalled a stronger expansion in business activity in the region. Despite this, the rate of increase was still weaker than the UK average for the third month running.
Contributing to a faster expansion in business activity, new orders rose at a sharper rate. According to anecdotal evidence, greater demand from existing clients led to the expansion in new orders. That said, similar to activity, new business increased at a weaker rate than seen across the UK as a whole.
Continuing the trend observed since June 2013, private sector firms in the region hired additional workers in January. However, the rate of job creation slowed to the weakest since November 2013, and to a pace that was softer than the UK average. At the sector level, manufacturers reported a decline in workforce numbers, while service providers signalled a slight increase.
Volumes of work outstanding were depleted for the third consecutive month in January, suggesting ongoing spare capacity in the region. That said, the rate of decrease was only slight.
Purchasing prices decreased for the sixth month running at the start of 2016. Lower prices for oil and other commodities led to a fall in input prices in the manufacturing sector, whereas service providers indicated a further rise.
Meanwhile, prices charged by private sector firms remained unchanged in January, having fallen in the previous five months.
Commenting on the Lloyds Bank Yorkshire & Humber PMI survey, Leigh Taylor, regional director for SME Banking in the North East said: “The upturn in the Yorkshire and Humber economy strengthened at the start of 2016. Both business activity and new orders expanded at stronger rates.
“However, in both cases, growth remained below the UK average suggesting that the region continues to lag behind the national trend. Employment growth eased to a 26-month low, highlighting perhaps a lack of confidence in the sustainability of the upturn.
“On a more positive note, reduced oil and other commodity prices helped to alleviate pressures on firms’ margins, while prices charged remained unchanged as firms continued to face strong competitive pressures.”