Growth in region’s business activity slows

BUSINESS activity in Yorkshire increased again last month, but the pace of growth was the slowest for six months, a closely watched survey of companies has indicated.

The region’s companies attributed the rise in new business to greater client demand and new export contract wins.

The latest purchasing managers’ index (PMI) showed that the combined growth in output of manufacturing and service sectors dipped below the UK average in March.

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The PMI also suggested that private sector employment rose only marginally last month, in contrast to strong increases in January and February.

Firms reported a sharp rise in input costs, widely blamed on the increasing cost of fuel, with price inflation increasing at the fastest pace since September.

Martyn Kendrick, area director for survey sponsor Lloyds TSB Commercial, welcomed the rise in new orders, the strongest in 2012.

But he warned that “this could partly reflect firms having taken a hit to their margins by reducing their selling prices in March”.

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The index, compiled by financial information provider Markit, is based on a survey of companies and tracks output, new orders, employment and prices.

Last week’s national PMIs for the manufacturing, construction and service sectors in March suggested that the UK would avoid a double-dip recession.

Manufacturing activity expanded at its fastest pace in 10 months, driven by a pick-up in new orders. George Kilburn, clerk at the Company of Cutlers in the manufacturing heartland of South Yorkshire, told the Yorkshire Post: “If it’s bespoke, high value and innovative, it’s growing.”

The building industry notched up the strongest growth in new orders for nearly five years and said confidence was improving.

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With robust growth in the dominant service sector, some economists predicted that the UK economy might have grown by as much as 0.5 per cent in the first quarter, reversing the 0.3 per cent contraction of the last quarter of 2011.

But these upbeat surveys were followed by shock figures from the Office for National Statistics, which revealed a one per cent drop in manufacturing output in February.

This illustrated that the UK economy was still on shaky ground and could still find itself in technical recession.