The report showed that private sector firms in Yorkshire were strongly optimistic about the 12-month outlook for activity in February.
Sentiment in Yorkshire was the highest out of all the 12 UK regions and the report said confidence was underpinned by expectations of a further recovery in demand as pandemic restrictions are eased.
The headline NatWest Yorkshire & Humber PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered 51.8 in February, up from 44.4 in January.
The latest reading pointed to a renewed expansion in Yorkshire business activity, following the first decline for seven months during January.
When explaining February’s increase in output, some panellists cited an improvement in demand compared with the situation at the start of the current lockdown. Although only modest overall, the expansion in activity was one of only four recorded across the 12 monitored UK regions.
Following the first reduction for eight months during January, there was a renewed increase in new work received by Yorkshire businesses in February. Although only marginal overall, the rise in sales was one of only two recorded across the 12 monitored UK regions (alongside London). Sub-sector data indicated that the upturn was predominantly driven by service providers.
Richard Topliss, chairman of NatWest North Regional Board, said: “After January’s lockdown-induced downturn, the Yorkshire and Humber private sector showed a slight recovery in February, posting a renewed expansion in activity.
“Although growth was only modest overall, the region remained one of the strongest performers in the UK, which has been the case throughout much of this crisis.
“The recovery in activity was important but an even brighter spot in the latest data was the upturn in employment, where the rate of job creation was the quickest for 18 months.
“The survey indicated that firms are now beginning to look beyond the Covid-19 pandemic and are planning for an economic recovery expected later this year.
“That optimism was further exemplified by sentiment towards the one-year outlook hitting a record high in February.”
The February data pointed to a modest rise in employment across the Yorkshire private sector. The result marked only the second increase in staff numbers over the past year and the rate of job creation was the quickest since August 2019 and faster than in any of the other monitored UK regions.
Some panellists noted hiring additional staff in anticipation of a strong recovery in demand in the coming months.
As was the case in each of the previous eight months, cost burdens faced by Yorkshire businesses increased in February. NatWest said the rate of inflation accelerated from January and was marked.
Anecdotal evidence indicated that the result was predominantly driven by higher raw material prices, although increased transport and Brexit-related costs were also mentioned.
Average output prices at private sector firms continued to rise at a marked pace in February. The rate of charge inflation accelerated to the fastest since December 2018. Panellists often commented that they had partially passed on higher input costs to their clients. Underlying data suggested that the increase was predominantly driven by manufacturing firms.
Although backlogs of work at Yorkshire businesses continued to contract in February, the rate of reduction eased slightly from January and was only marginal overall. The decline was far softer than the UK average. At the sub-sector level, the decrease was centred on manufacturing.