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North East rate of job creation at ten month high

The rate of private sector job creation in the region hit at ten-month high during April according to the latest Lloyds Bank Commercial Banking North East PMI.

April data pointed to further improvements in economic conditions across the North East, where a sharper expansion in new business flows also led companies to raise output levels again.

In both cases, rates of growth accelerated and surpassed the respective averages for the UK as a whole.

Up sharply from 56.9 in March to 62.4 in April, the headline Lloyds Bank North East Business Activity Index – a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors – was at a nine-month high and above the respective index for the UK economy. Growth remained balanced, with increases seen in the manufacturing and service sectors.

Underpinning the latest rise in output was a sharp and accelerated increase in new business. Incoming new work expanded at the quickest pace since July 2014 and one that outstripped the UK average. Evidence from panellists highlighted strengthening demand conditions and the launch of new products.

As has been observed in each month since last November, payroll numbers rose during April. Having accelerated to the quickest since June 2014, the rate of job creation was robust and above its long-run average. Companies hiring of additional workers reflected rising workloads.

North East companies indicated that unfinished business levels fell during April, reversing the increase seen one month previously. The rate of depletion was only slight, but contrasted with an accumulation seen at the UK level.

Ending a 32-month sequence of cost inflation, average input prices fell during April. There were reports of lower prices paid for some raw materials. Whereas cost burdens decreased in the manufacturing sector, services companies continued to record increases.

Average selling prices also fell during April, with the rate of reduction being the quickest for almost six years. Sector data indicated that both services firms and goods producers charged lower tariffs (on average) during the latest month. Those panellists reporting price discounting commented on decreased cost burdens and efforts to attract new clients.

Commenting on the Lloyds Bank Commercial Banking North East PMI survey, Leigh Taylor, area director for SME Banking in North East, Lloyds Bank Commercial Banking, said: “Business conditions in the North East continued to improve in April, with growth rates for output, new work and employment all higher.

“With cost burdens falling over the month, pressure on businesses’ margins was reduced and profitability is likely to be enhanced in coming months. This all puts the region on course to provide a strong contribution to the UK GDP in the second quarter of the year.”

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