BUSINESS confidence reached its highest level for almost three and a half years in Yorkshire last month, according to a new study.
The study, which has been compiled by professional services company BDO, will be welcomed by the coalition government, because it suggests growth will continue to pick up speed for the rest of 2013.
BDO’s Optimism Index, which predicts business performance in two quarters time, increased for the eighth consecutive month – from 98.0 in August to 100.7 in September, its highest level since the Government was formed.
Optimism in the services sector, which accounts for more than three-quarters of the economy, climbed from 97.7 in August to 99.2 in September, while the manufacturing sub-index jumped to 107.0, up from 99.6 last month.
BDO’s Output Index, which predicts short-run turnover expectations, also continued its upward trend, reaching a 30-month high of 99.5 in September, up from 98.3 in August.
The sub-indices for both the manufacturing and services sectors, which collectively cover the overwhelming majority of UK GDP, showed strong improvement.
The services sector sub-index climbed to 98.6 in September, from 97.7 in August, while the manufacturing sub-index rose well above the August figure of 100.7 to 103.6 in September. Overall, these figures suggest the recovery is gathering pace and that growth is likely to accelerate into the fourth quarter of 2013.
Ian Beaumont, partner and head of BDO in Yorkshire, said: “With the recovery firmly established across the services and manufacturing sectors, it’s encouraging to see the economy gearing up for a strong finish to 2013.
“On our doorstep, we are seeing sluggish eurozone recovery which could compromise the resurgence and across the pond US legislators are at a political impasse over the Federal Budget.
“However, we think that policymakers should be happy that we seem, perhaps later than necessary, to be seeing the return of growth.”
Inflationary pressures affecting both the services and manufacturing sectors are expected to ease over the next three months.
BDO’s Inflation Index, which predicts the short-run business cost of inflationary pressures, recorded a fifth consecutive decline to 100.6 in September from 101.0 in August.
Weak wage growth of 1.1 per cent during May to July 2013, compared with a 21-month high of 2.2 per cent between April and June 2013, eased pressure on the labour-intensive services sector.
Input prices for manufacturers increased by 2.8 per cent over the 12 months to August – a marked decline on the 5.1 per cent growth seen over the year to July and in line with the falling BDO Inflation Index.