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Edging towards recovery

OUTPUT and new business growth among the region’s firms slowed last month, new figures have revealed, although they continued to expand at rates in line with, or above, the national average.

Meanwhile, the regional PMI figures also showed better business conditions in the North East’s labour market as staffing levels rose at an accelerated pace.

Output rose at a marked pace across the North East private sector during April, as shown by the headline seasonally adjusted Business Activity Index – which measures the combined output of the region’s manufacturing and service sectors – registering 56.4.

The increase was the tenth in a row and above the series’ pre-downturn trend.

Underlying the latest expansion of output was another sharp rise in new work. Approximately 35% of panel members registered growth during the latest survey period, citing an improved economic climate as the key factor supporting demand.

Sector data revealed that new business increased considerably across both manufacturers and service sectors.

Respondents noted that outstanding business accumulated as a result of greater workloads. Backlogs built up for the second straight month and at a solid pace that was the fastest since December 2007.

The increase contrasted with the national average, which pointed to a slight contraction of work-in-hand across the UK as a whole.

To ease pressures on capacity and manage greater business requirements, North East private sector companies hired additional staff at the start of Q2.

Job creation was robust and the most marked for twenty-eight months, with one-quarter of panellists registering growth. Both manufacturers and service providers enlarged the size of their workforces.

Gemma Wallace, economist at Markit, said: “Business conditions in the North East continued to improve at the start of Q2. Although weaker than in March, both output and new business growth were marked and faster than their pre-downturn trends.

“Consequently, job creation in the region accelerated and firms’ pricing power improved. Charges rose at a moderate pace that was slightly above the national average. This was in contrast to input cost inflation, which remained weaker than the UK average despite accelerating to a sharp pace.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .