Partner Article

Region edges towards recovery

THE North East enjoyed continued regional economic recovery in May, albeit at a slower pace, new figures have revealed.

All nine English regions continued to register solid growth of private sector business activity in May, according to the latest UK regional Purchasing Managers’ Index__® (PMI®) data.

For only the second time in the past nine months, output growth in the North East was weaker than the UK average. Meanwhile, input cost pressures intensified further.

However, the region’s private sector firms recorded a rise in business activity for the eleventh month in succession during May.

Although still solid, the latest increase was the weakest since August 2009. The seasonally adjusted Business Activity Index posted 53.8, down from 56.4 in April. Sector data revealed that services remained the primary driver of output growth in May.

The rate of expansion of new work also slowed noticeably during the latest survey period, but remained solid. The rise in incoming new business was broadly similar to the UK average.

Anecdotal evidence showed that an improved economic environment had supported demand for the region’s goods and services.

Further gains in new work led to another build-up of backlogs across the North East private sector in May.

Input price inflation accelerated during May, reaching a substantial pace that was the most pronounced since September 2008. Around 43% of the survey panel reported higher input costs, attributing this to a combination of greater fuel and raw material prices, alongside increased labour costs and unfavourable exchange rates.

Allan Little, principal economist at regional development agency One North East, said: “The survey signalled that North East economy continued to emerge from recession in May, although the pace of recovery is still fragile.

“It is encouraging that new orders expanded, leading to a further improvement in recruitment. One North East is working with partners to support regional businesses and workers into further economic growth.”

The PMI features original survey data collected from a representative panel of companies based in the North East and operating in both manufacturing and service sectors.

Index numbers are calculated from the percentages of respondents reporting an improvement, no change or decline.

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