Region sees UK’s biggest slowdown in output growth

Phil Hawker, area director for Lloyds TSB Commercial in Yorkshire, said: “A near-stagnation of service sector business activity contrasted with continued robust growth in manufacturing production.

“Private sector employment meanwhile increased at the slowest rate for seven months in April, suggesting renewed caution about the wider economic outlook.”

He added that strong cost inflation has continued to place pressure on operating margins, which in turn resulted in the sharpest rise in output charges for two-and-a-half years.

That said, April data from the Lloyds TSB Yorkshire & Humber PMI report indicated solid gains in both activity and new orders although the rates of growth weakened since March, to fifteen and four-month lows respectively.

Respondents continued to signal strong inflationary pressures during April.

The headline Lloyds TSB Yorkshire & Humber Business Activity Index – which measures the combined output of the region’s manufacturing and service sectors – reached 53.6 in April, down from 57.9 in March.

Lloyds TSB said that although the latest reading signalled expansion in output for the twenty-third successive month, the rate of growth was the slowest since January 2010.

Survey respondents linked output growth to a larger volume of new business last month.

New order growth was strong, with both the region’s manufacturers and service providers receiving higher levels of new work in April.

The number of people employed by private sector firms in the region increased in April, but the rate of employment growth has weakened since March and was the slowest in seven months.

During April, surveyed firms recorded higher input prices. A wide range of goods increased in cost, with fuel and other oil-related products particularly highlighted by panellists.

Subsequently, the rate of input price inflation remained steep, but was slightly weaker than that recorded in March.

Firms passed on some of their greater cost burdens to clients in April.

The latest rise in output prices strengthened to the fastest in 30 months, but was still weaker than the UK average. Sector data showed that manufacturers raised their prices, whilst service providers lowered their charges marginally.

The Yorkshire & Humber PMI features original survey data collected in April 2011 from a representative panel of companies based in the region operating in both manufacturing and service sectors.