Business activity in Yorkshire rose at its fastest rate in over 13 years during July, prompting hopes that the region is about to emerge from the biggest economic slump in living memory.
According to the latest Lloyds TSB Yorkshire & Humber PMI data out today, business activity expanded at a rate which has been surpassed only three times in the history of the research, which dates back to January 1997.
New orders also recorded substantial growth, and a combination of the two led to an increase in employment.
The headline Lloyds TSB Yorkshire & Humber Business Activity Index, a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors, rose from 55.5 in June to 59.8 in July.
This was the fastest rate of growth since December 1999.
July marked the ninth consecutive month of expansion.
Martyn Kendrick, area director for Lloyds TSB Commercial Banking in Yorkshire, said: “Private sector business output rose at the fastest pace seen for over 13 years across Yorkshire and the Humber last month.
“New orders also expanded at a rate not seen since before the financial crisis, coupled with the fastest increase in outstanding work ever recorded in the survey.
“Despite this strong expansion, Yorkshire and Humber was only the third fastest growing region after London and the North West, which highlights the recent strength of the UK’s private sector growth.”
New order growth also increased, resulting in the fastest rate recorded since April 2004 for the region’s private sector.
More than a third (38 per cent) of businesses recorded higher levels of new incoming business. A number said that larger sales teams and new projects were key drivers to growth.
Employment rose for the second consecutive month, although at a slightly lower rate than nationwide.
Lloyds TSB said the primary factors behind the increase in job numbers were higher levels of demand and increased production.
July also marked the second consecutive month of higher levels of outstanding business. Respondents cited higher demand as the primary factor.
Input costs in the region rose for the eleventh consecutive month in July, although the rate of growth was marginally weaker than input price inflation nationwide.
The recent weakening of the pound was listed by a number of respondents as a cause of higher input costs.
Panellists also cited higher oil prices and increased labour costs.
The research showed that charges rose for the third consecutive month in the region.
Survey respondents mentioned increased product complexity and the transfer of higher energy costs to customers, as the key drivers.
The research comes out on the same day as the latest Business Trends report by accountants BDO LLP in Yorkshire, which showed that short-term business prospects improved in July and reached their highest level since May 2011.
BDO’s Output Index climbed to a 26-month high of 96.8 in July up from 94.9 in June – a fifth consecutive monthly increase and above the crucial 95.0 mark that indicates growth.
Output in the services sector, which makes up three quarters of the economy, rose from 94.7 in June to 96.5 in July, while the manufacturing sector rose from 95.7 in June to 98.3 in July.
BDO said business confidence also continued to rise. Its Optimism Index, which predicts business performance in two quarters time, moved up from 94.3 in June to 95.6 in July, its sixth consecutive monthly increase and the highest level since April 2012.
The group said that rising confidence is feeding into businesses’ employment intentions and the Employment Index moved upwards, increasing to 97.0 from 96.7 in June.
BDO’s Inflation Index also moved in the right direction, with overall inflation expectations decreasing to 102.2 in July, down from 103.4 in June, thus easing financial pressures on businesses.
Ian Beaumont, partner and head of BDO LLP in Yorkshire, said: “It’s encouraging to see short-term business prospects improving and confidence in our economy continuing to strengthen. Indeed, all of our indices moved in the right direction this month, suggesting that the new Bank of England governor Mark Carney has joined at an opportune time.