Region’s private sector output shows strongest growth in months

The latest Lloyds TSB Regional Purchasing Managers’ Index (PMI) increased to 52.7 in August, up from 49.5 in July overall, indicating a solid expansion of output across the English regions as a whole, with the pace of growth the fastest for five months.

London led the way in August, posting solid business output growth that was the strongest since March. It was closely followed by Yorkshire and the Humber, where business activity bounced back strongly after a decline seen in the previous month.

Martyn Kendrick, area director for Lloyds TSB Commercial in Yorkshire and the Humber, said: “After the first reduction in private sector output in almost a year during July, Yorkshire and Humber bounced back with overall business activity rising solidly in August.

“This partly reflected an increase in new business, which was also in contrast to a decline recorded in the previous month. Despite this, employment remained low, with the latest data pointing to only a marginal rise over the month, as companies remained cautious about the economic outlook. The rebound in Yorkshire and Humber reflected a strong performance of the service sector, with manufacturing continuing to lag behind.”

The PMI data for Yorkshire and the Humber, which measures the combined output of its manufacturing and service sectors, returned above the 50.0 no-change mark that separates growth from contraction.

At 54.3, up from 48.8, the 
index was the highest in six months.

But the North East lagged behind the rest of the English regions, with a marked drop in manufacturing production contributing to a sixth successive monthly reduction in regional output.

Meanwhile, separate research showed today that optimism among UK businesses has hit a 20-year low.

BDO’s Optimism Index, which predicts business performance two quarters ahead, fell to 89.1 in August from 93.1 in July. This is the sixth consecutive month that the data has registered a drop, with a four-point plunge from 93.1 in July. BDO’s Output Index – which predicts short-run turnover expectations – also fell sharply, from to 90.8 in August from 93.9 in July, reaching its lowest point for 40 months.

The economy shrank by 0.5 per cent between April and June, after two quarters of declines, making the current double-dip recession the longest since the fifties.