Yorkshire defied the slowdown in UK growth in July as the county's output increased at a faster rate than the rest of the country, according to the latest NatWest PMI survey.
The bank said Yorkshire's output increased at a solid and accelerated rate and employment growth has also picked up as business confidence improves.
Job creation in the region gathered pace to defy the trend seen at the national level.
The headline NatWest Yorkshire & Humber Business Activity Index – a seasonally adjusted index that measures month-on-month changes in the combined output of the region’s manufacturing and service sectors – rose to 55.0 in July, up from 53.1 in June.
The latest reading signalled a solid rate of growth that was quicker than that seen across the UK as a whole (53.6).
July's survey indicated sustained increases in levels of output across both the manufacturing and service sectors, with the former continuing to see the stronger rate of expansion.
NatWest's chief economist Sebastian Burnside said: “Belying a slowdown across the UK as a whole in July, businesses in Yorkshire & Humber saw improved performances in terms of both output and job creation. Employment growth in the region picked up speed and was the joint fastest in the country, although it did remain well shy of the elevated levels seen during much of 2017.
“Yorkshire & Humber also stands out when it comes to business confidence, with the level of optimism among the region’s firms towards future output the highest anywhere in the UK."
NatWest said growth in the volume of new orders placed with companies in Yorkshire & Humber played a key role in driving the upturn in business activity at the start of the third quarter.
Inflows of new business have now risen on a monthly basis throughout the past two years. However, although still solid overall, the latest increase was the least marked in 2018 so far.
With demand for the region's goods and services continuing to rise, firms in Yorkshire & Humber expanded capacity by taking on extra workers.
There were also reports from surveyed businesses of staff being hired to enhance sales potential and in anticipation of future growth. The rise in employment in July was more marked than in June and steeper than seen across the UK as a whole.
The amount of outstanding business (ie, orders received but not yet completed) at Yorkshire & Humber firms meanwhile stayed unchanged, breaking a two-month sequence of falling backlogs.
The region’s businesses faced another steep rise in average input costs in July, with the level of inflation remaining well above the national rate. Surveyed companies reported higher prices for fuel and a range of raw materials, particularly metal.
As a result, businesses charged more for their goods and services as they looked to offset higher costs. The rate of increase in selling prices was the quickest for three months.
Mr Burnside said: “The rising price of fuel, alongside elevated commodity prices, translated into higher charges for goods and services in July. Price pressures across Yorkshire & Humber are proving stubbornly high, though with the recent rate rise there is added reason to believe inflation will soften over the remainder of the year.”
The latest data showed a rebound in local firms' confidence towards the year-ahead, up from a 22-month low in June to the highest since April.