Staff numbers increase amid sharp growth

The Government has sold another £500 million-worth of shares in Lloyds Banking Group

The research showed that growth accelerated in February, having slowed down in each of the previous five months.

As a result, the index showed that staff numbers are rising at a marked pace.

Cost pressures have risen as input prices increased, although Yorkshire enjoyed a weaker rate than the UK average.

Leigh Taylor, area director for SME Banking in the North East for Lloyds Bank Commercial banking, said: “Private sector business activity growth in Yorkshire & Humber accelerated in February, having eased in the previous month to a 22-month low.

“The expansion in business activity was underpinned by a further rise in new work, with firms linking greater new order growth to success in gaining new clients from both domestic and international markets.”

The seasonally adjusted index posted at 57.5 in February, up from January’s 22-month low of 54.2, signalling an improvement in business conditions at private sector firms in the Yorkshire & Humber region.

Mr Taylor said the latest expansion was faster than the UK-wide trend for the first time since October 2014.

He added that stronger Yorkshire & Humber activity growth reflected an upturn in both the manufacturing and service sectors.

Private sector firms hired additional staff for the twenty-first consecutive month in February.

The rate of expansion was sharp, with firms associating employment growth with business expansion and stronger demand conditions.

Despite a rise in workforce numbers, backlogs of work accumulated in February.

Lloyds said companies had commented on higher production requirements leading to pressure on capacity.

The index showed that inflationary pressures were evident in the Yorkshire & Humber region as input prices increased amid reports of higher staff wages.

However, the rate of inflation was only modest and slower than the UK average.

Lloyds said that anecdotal evidence suggests that private sector firms increased their selling prices to improve profit margins.

Elsewhere, the latest review of the economic outlook by EEF, the manufacturers’ organisation, paints an upbeat picture with projected growth of 1.7 per cent in the sector this year.

But the organisation warned that risks remain with a third of manufacturers expecting an improvement in economic conditions compared with two thirds at the same time last year.

EEF said seven out of 10 companies see the UK as a competitive location in which to operate.

The organisation is urging the Chancellor to cement the UK’s reputation as being open for business with measures to boost investment and exports.

It is also seeking support from the Chancellor for a scheme that puts employers in the driving seat when it comes to apprentices. EEF is calling for a step-change in the way apprenticeships are funded and is recommending the introduction of a voucher model which would allow employers to purchase training from providers.

In addition it is calling for an extension of the Annual Investment Allowance, together with measures to encourage more companies to make use of research and development tax credits.

Andy Tuscher, Yorkshire and Humber region director at EEF, said: “The outlook for the economy remains positive and manufacturers want to see a continuation of what has worked well in support of industry, from industrial strategies to a stable and predictable tax regime.

“While we have a long way to go to achieve a better-balanced economy, in his final Budget of this parliament the Chancellor can still do a great deal to underpin growth across manufacturing and industries which are critical to long-term growth.

“Bringing forward critical compensation for energy intensive industries will send a very positive message to key industries.”