Sectors helping region to climb out of the slump

Margaret Wood, regional chairman of the IoD said, however, that producers are being hit by rising input prices, particularly in metals and glass.

Mrs Wood was speaking as the Yorkshire and Humber PMI, which measures the performance of the manufacturing and service sectors, showed the region continued to grow in October.

The business activity index was unchanged at 54.4 from September, meaning the economy expanded at the same rate.

The report also showed that firms saw new orders increase "at a marked rate", helping to create solid growth in output, while the rate of job creation quickened to a six-month high.

Mrs Wood, who runs specialist engineering and manufacturing firm ICW Modular Glazing in Wakefield, said manufacturers were benefiting from their place in the globalised market while the development of carbon capture and storage plans on the east coast and the digital region project in the south of the county had helped achieve greater prominence for Yorkshire.

"The investment seems to be going into Yorkshire which is really good. We have got new technology coming through from the likes of Sheffield Forgemasters and carbon capture and the digital economy."

Mrs Wood warned that the region's businesses were having to cope with rising input prices – now in their thirteenth month of inflation – but said signs of a modest upturn could be felt.

"Manufacturing is having a renewal but not the traditional industrial type. (The recovery) is about harnessing those skills – high-end manufacturing and the knowledge economy."

The growth in output, which was the same rate as last month and the joint-weakest since January, was based on a quickening in new orders, with firms saying they had been boosted by new product launches and the return of customers whose orders had been postponed.

This prompted companies to expand their production capacity and pushed up the number of people employed in the private sector at a "modest pace" but still greater than the UK average.

The level of outstanding work fell during October as increased production helped absorb a growth in new orders, although unfinished work has now been recorded for the last five months. The rate of inflation in the price of the end products rose, but was still below the UK average, as tough competition meant Yorkshire firms were reluctant to pass on increases to customers.

Nick Pontone, director of policy at Yorkshire and Humber Chambers of Commerce, said: "These positive figures show Yorkshire's steady recovery is being sustained despite a tough trading environment. It backs up evidence from Chamber members across the country that Yorkshire is faring well compared to other regions.

"There are also early indications that more businesses are creating new jobs which is crucial to the recovery as we enter the public sector recession over the next couple of years."

Patrick Bowes, chief economist at outgoing regional development agency Yorkshire Forward, said: "The region's businesses enter Q4 in reasonably good shape with a bounce back in new order growth contributing to a marginal improvement in employer hiring intentions."

Recovery 'is losing steam'

BRITAIN will avoid a double-dip recession but faces months of economic growth slowing further, a leading economist has said.

Dr Howard Archer, chief European and UK economist at IHS Global Insight, spoke out after the Organisation for Economic Co-operation and Development said the recovery was set to lose steam in Britain, as well as in France, Italy and Canada.

The continuing credit squeeze, high unemployment and low wage growth would all contribute to pressure on the economy over the next few months, according to IHS, which predicted UK growth would slip to 0.5 per cent in the fourth quarter of this year, compared to 0.8 per cent in Q3.