STORM clouds continue to overshadow the economy, with separate surveys revealing plunging confidence and falling output from Yorkshire’s manufacturing and service firms.
Lloyds TSB’s purchasing managers’ index (PMI) for Yorkshire and the Humber reveals private sector output dropped to 48.8 in July, down from 53.1 in June and the first contraction in 11 months. A score below 50 reflects contraction. The index, measured by Markit Economics, was the lowest since May 2009.
A separate survey by accountancy firm BDO reveals national optimism about business performance two quarters ahead has hit a seven-month low.
It fell for the fifth consecutive month from 93.5 in June to 93.1 in July. The index also moved further from the crucial 95 mark that indicates growth.
Lloyds’ PMI shows Yorkshire companies received lower volumes of new business in July, ending seven months of increases. More than a third of companies said new orders are down month-on-month.
Firms are also eating through backlogs of outstanding business, with order books falling at their fastest rate in almost three years.
The survey also revealed falling employment after nine months of job creation at both factories and service companies, albeit only marginally.
However, weaker oil prices helped input costs at Yorkshire firms.
The drop in input costs was the strongest in 37 months, with Yorkshire posting the fastest rate of decline among all 12 UK regions.
Companies also reported a corresponding fall in average selling prices in July. These have been falling month-on-month since July.
Both manufacturers and service sector companies cut prices in July, with firms generally reporting stronger competition.
Martyn Kendrick, area director for Lloyds TSB Commercial in Yorkshire, said: “Growth in the Yorkshire and Humber economy gave way in July, with both activity and new business falling modestly from June.
“Job losses were also reported over the month, with both manufacturers and service providers reducing their staffing levels.
“The positive news from July’s survey was that input prices fell solidly from June, partly reflecting lower oil prices, with the strongest rate of decline in over three years.”