Growth spurt sees Yorkshire firms rise in stature

The findings from the latest Regional Purchasing Managers Index (PMI) should boost Yorkshire’s economy, which has been struggling to keep pace with UK rivals.

The January PMI signalled a strong private sector expansion, supported by sharp employment growth and a solid increase in new work.

The headline index, which measures the combined output of the region’s manufacturing and service sectors, rose from the six-month low of 55.8 in December to 57.6 in January. A reading of 50 or more indicates growth. Respondents attributed the upturn to improving economic conditions.

There was more good news on jobs as employment grew for the eight successive month in January with the pace of expansion accelerating to a two-year high.

New business rose for the 18th consecutive month and though the pace of expansion eased for a third month running it remained solid. Manufacturers saw a sharper increase in new orders than service providers, according to the PMI.

Contracts outstanding increased for the first time since October and did so at a relatively solid pace. But the rate of expansion paled against the national average.

“The latest survey revealed a further sharp expansion in the private sector across Yorkshire and Humber in January,” said Martyn Kendrick, a regional director at Lloyds Bank, which sponsors the monthly survey.

“Backlogs of work increased for the first time since October, with the strongest growth seen in five months, while business activity growth strengthened from December, suggesting a recovery of the growth momentum seen during the latter half of 2013.”

A separate report from Capital Economics looking at the UK regions warned that Yorkshire is struggling to take part in the economic recovery.

Capital regional economist Richard Holt said recovery is evident across the UK, but at differing rates, with southern England tending to see faster growth on several measures.

He added that the Midlands are now looking more robust and London stands out much less clearly than it did a few months ago.

But he warned: “More so than a month ago, the weight of evidence comes down on the side of being disappointed by the performance of the Yorkshire and Humber economy in late 2013.”

He said the PMI survey for the second half of 2013 revealed a disappointing period for the regional economy, with activity index well below that of the UK.

Mr Holt added: “Worse than that, Q4 was below Q3, at 57.2 compared with 58.9.

“This put the region in the same company as the North West and Scotland, both of which also reported disappointing slowdowns between the quarters.”

He described the pace of job creation as “not exactly in the drag-racing class” and pointed out that Yorkshire has the second-weakest employment growth in the UK, with only the North East having more to feel gloomy about.

But Mr Holt was more upbeat about the labour force survey, with Yorkshire recording a 1.1 per cent increase in total public and private sector employment, outpacing the UK average.

However, he said the evidence from the housing market was not great.

“The average monthly change in prices in Q4 was a decline of 0.5 per cent, according to the Land Registry, with a strong November outweighed by weakness in both October and December.

“This tends to support the notion that Yorkshire and Humber ended last year struggling to fully share in the spoils of emerging economic growth.”

A leading economist warned at the weekend that the recovery has done nothing to rebalance the UK economy away from London and the South East and may have even increased the nation’s dependence on the capital.

Jonathan Portes, director of the National Institute of Economic and Social Research, blamed the failure on centralised decision-making.

He told the Yorkshire Post: “Overall it is so far a recovery being driven by London and the South-East and consumer spending and house prices. There does not seem to be anything pushing against the medium-term dynamics.”

Andrew McPhillips, economist at Yorkshire Building Society, said Yorkshire has not been one of the better performing regions and has the second highest rate of unemployment in England.