Strong output makes region nation’s pacesetter for job creation

Yorkshire had the best rate of employment growth in the country in January with output across the manufacturing and service sectors increasing at an encouraging rate.

The report also showed that private sector employment expanded at the fastest rate since May 2004.

The survey of purchasing managers said the growth was fuelled by new orders, improved market confidence and greater client demand with new business increasing at the strongest pace in nine months.

“The Yorkshire region started 2011 in a strong position, with output and new order growth quickening to eight and nine-month highs respectively,” said Phil Hawker, area director for Lloyds TSB, which sponsored the report.

“This led to a strong rate of job creation and employment growth in Yorkshire remained the fastest of all 12 UK regions.”

However, the report also sounded a warning over rising costs, showing that Yorkshire posted the fastest rate of input price inflation of all UK regions in January.

Lloyds TSB said output and new work increased across England following the disruption at the end of last year caused by the severe weather.

Hopes that the country is on course for stronger-than-expected recovery were dampened by another survey yesterday which showed a steep drop in business confidence.

The report into service sector optimism by accountants at BDO blamed elevated inflation, weak earnings growth, the erosion of households’ real disposable income and impending public sector cuts for the sharp decline.

Peter Hemington, a partner at the professional services firm, said: “The significant fall in service sector confidence deals a blow to the Government, especially given the sector’s importance to the economy as a whole. “If the Government is to rely on the private sector to drive the economy, more must be done to create an environment that facilitates growth.”

The service sector accounts for around 55 per cent of the country’s gross domestic product, so its performance is crucial to the UK’s economic well-being.

Mr Hemington urged the Bank of England to maintain low interest rates to help businesses and consumers. He said the Bank might also have to consider more quantitative easing this year.

He added: “We do hope that 2011 is set to be a year of two halves.

“While sluggish growth is expected in the first half of the year, there are signs of an improvement in business investment which should help the economy to pick up from the summer onwards.”