Recovery may be fading for region as growth eases up

Lloyds TSB Yorkshire area director, Martyn Kendrick.

The latest monthly survey of purchasing managers signalled a 14th successive month of rising business activity.

But the combined output of the manufacturing and service sectors fell from 56.9 in November to 55.8 in December, the third consecutive decrease in the index and the lowest reading since June 2013. A reading of 50 or above indicates growth.

Martyn Kendrick, a regional director at survey sponsor Lloyds Bank, said: “Yorkshire and Humber companies continued to expand during December, with business activity and new orders rising strongly.

“However, both output and new order growth had weakened to six-month lows in December.

“Given the uncharacteristically steep expansion recorded in the autumn of 2013, it is perhaps unsurprising that growth is now returning to trend, though the latest results still represent strong growth in the region.”

Economists in London were not so sure. Richard Holt, regional economist at Capital Economics, said some recent indicators show Yorkshire and Humber is slipping well behind the UK’s growth rate.

He said: “It looks as if the South East, the East Midlands and of course London were leading UK economic growth in the closing months of 2013.

“The North East and Northern Ireland no longer languished quite so markedly behind other parts of the country, but that’s partly because Wales and, slightly oddly, Scotland seem to have been dragging their feet in the period.

“Even so, the North East’s unemployment rate remained in double figures.”

According to today’s PMI survey, new orders in December edged down from October’s record high, although December marked the 17th consecutive month of new business expansion.

The index said employment rose for the seventh consecutive month, good news for the region’s jobs market.

The PMI also said that backlogs of work fell for the second month running, though the pace of decline eased from November.

Across the UK, outstanding business grew for a seventh consecutive month.

Higher fuel and commodity costs continued to push up the input prices, which rose for the 16th consecutive month, though the pace of inflation eased slightly from November.

Some respondents passed these costs on to customers.

The strength of the economy will come under the spotlight tomorrow when Tom Vosa, chief economist at Yorkshire, speaks at Leeds Business School.

He said: “There are very real questions over the quality of the recovery.”