Region’s firms lead way with fastest-growing activity rate in UK

The purchasing managers’ index revealed that Yorkshire posted the fastest activity growth of the 12 UK regions in June. The index suggested that Yorkshire’s economy has grown for the 10 successive month, in spite of the UK suffering overall recession.

“Private-sector expansion across Yorkshire and Humber gained momentum in June, supported by a further, albeit weaker, rise in new business,” said Martyn Kendrick, Yorkshire director for Lloyds TSB Commercial, which sponsors the survey.

“Notably, output growth was the fastest of all 12 UK regions in the survey, followed closely by the East Midlands. Employment only increased marginally, however, and at a weaker pace than the UK average.”

He added: “On a more positive note, the slowest rate of input price inflation in 2012 so far will ease some pressures on profit margins.”

The survey of representative companies offered a rare piece of good news as a rash of polls by accountancy firms revealed a worrying fall in business confidence.

A survey by Deloitte showed that chief finance officers (CFO) experienced their sharpest decline in confidence since the second quarter of 2007.

They are adopting defensive strategies and the vast majority are set against taking risk onto balance sheets, the survey of 137 CFOs found. This suggests they are less likely to unlock untapped cash reserves, thus stifling economic growth.

But the CFOs also reported that the cost of credit for big business is at its lowest level in five years. This is in stark contrast to the experience of many SMEs, which have seen their borrowing costs rocket.

Martin Jenkins, senior partner at Deloitte in Yorkshire, said: “On balance, CFOs see hiring, capital spending and discretionary spending declining over the next year.”

Meanwhile, the BDO business trends survey found that business optimism has reached its lowest point this year, which it said indicates a bleak second half to 2012.

Significantly, confidence dropped sharply in the manufacturing sector, seen as key to restoring the UK’s economic fortunes through exports.

Ian Beaumont, of BDO in Yorkshire, urged the Government to help ensure that the UK is not at the mercy of uncertainty in Europe and to look for unexplored trade opportunities further afield.

In a further blow, Ernst & Young reported that the number of profit warnings from listed businesses in Yorkshire and the North East rose by 43 per cent in the last quarter.

But it added that current profit forecasts have built in “a slow and difficult recovery”.