Regional economy shrank in October, survey says

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YORKSHIRE’s economy shrank last month, new research has suggested.

The latest business activity index revealed that private sector output reduced in October, although the rate of decline was only marginal.

Yorkshire also underperformed compared to rest of the country, according to the survey of purchasing managers, which measures the combined output of the region’s manufacturing and service sectors.

Martyn Kendrick, area director for survey sponsor Lloyds, said: “The fourth quarter of 2012 began on a low note for the Yorkshire and Humber private sector economy.

“Business output fell over the month and there was only marginal growth in both new orders and employment.

“The region generally performed below par in October compared with the UK average.

“Although firms reduced their selling prices in a bid to boost sales, this could be difficult to sustain going forward as rising input costs may put further pressure on profit margins.”

The decline in activity ended a mini-recovery of two successive months of growth. The rate of decline was similar to the national average, said survey compiler Markit.

Outstanding business fell for the sixth consecutive month and around 30 per cent of panellists reported reduced backlogs of work with the overall decline the strongest in three months.

On the positive side, private sector employment in Yorkshire increased in October and employers attributed the rise to recent growth in new orders.

The marginal rise in headcount in Yorkshire contrasted favourably with the national picture, which saw an overall fall.

Respondents reported a second successive monthly rise in input prices with the rate of inflation the strongest since April.

Firms blamed rising energy costs.

They also reducing their average selling prices during October after keeping them broadly unchanged in September.

Britain’s economy exited recession in the third quarter.

But manufacturing surveys have shown renewed weakness with companies reporting a drop in export orders in October as the euro zone, Britain’s largest export market, is teetering on the brink of recession.