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North East employment continues to rise against economic ‘soft patch’, finds study

The latest Lloyds Bank Regional Purchasing Managers’ Index has reported a rise in employment for the second month running in June, despite local businesses continuing to report weak growth.

The latest Business Activity PMI fell marginally from May’s 50.8 to 50.6 in June. This was the lowest reading since March and signaled only a very low rate of growth. It compares with a national average figure of 53.8. A figure above 50 signifies expansion in business activity, while a reading below 50 signals contraction.

Nevertheless, jobs continued to be created as local firms responded to an increase in demand. New orders rose for the eleventh month running, albeit at the slowest rate since last August.

June’s survey also showed a steep and accelerated rise in firms’ input costs, linked to salary inflation and the weak pound. However, average prices charged for goods and services were raised only slightly with the aim of remaining competitive.

Meanwhile, the survey’s indicator of business confidence – which tracks expectations for output in the year ahead ­– dropped to its lowest level in seven months.

The Lloyds Bank PMI, or purchasing managers’ index, is the leading economic health-check of UK regions. It is based on responses from manufacturers and service providers about the volume of goods and services produced during June compared with a month earlier.

Leigh Taylor, regional director for the North East at Lloyds Bank Commercial Banking, said: “Despite the local economy enduring a recent soft patch, with the North East remaining the weakest-growing region in terms of output, employment has continued to rise which is a great sign.

“However, it remains to be seen how long this can go on with inflows of new orders showing signs of waning and business confidence taking a tumble in June. Sustained cost pressures are also a threat, especially given firms’ lack of pricing power.”

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