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New private sector business accelerating in the North East

Latest data from Lloyds Bank Commercial Banking North East PMI signalled a further increase in total new business placed at private sector firms in the North East, with the rate of growth picking up to a four-month high.

Stronger client demand led companies to increase their output again in December, albeit at a slightly weaker pace than in the previous month.

Employment levels meanwhile increased modestly for the second month in a row. On the prices front, input costs increased at the strongest rate in a year, while output charges declined slightly.

The headline Lloyds Bank North East Business Activity Index – a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors – posted 56.9 in December, down slightly from 57.9 in November, and signalled a sharp expansion of North East private sector output.

Despite losing some growth momentum, the rate of expansion remained above the series long-run trend and was stronger than that the UK private sector economy average.

Increased new business supported the latest expansion of output in the North East. Furthermore, the rate of new order growth picked up to the sharpest since August, and was above the UK-wide trend. Sector data indicated that both service providers and manufacturers saw sharp increases in new work.

North East private sector firms increased their staffing levels again in December, albeit at a modest rate. Furthermore, the pace of job creation was much slower than that seen across the UK private sector economy as a whole.

Higher new workloads led to an increased amount of backlogged work in December. Moreover, the rate of accumulation quickened to a seven-month high that was much stronger than the UK private sector economy average.

North East private sector input costs continued to increase in December. The rate of inflation quickened since November to a solid pace that was the strongest in a year.

Meanwhile, prices charged by North East private sector firms fell for the third month in a row, albeit fractionally.

Area director for SME Banking in the North East, Lloyds Bank Commercial Banking, Leigh Taylor, said: “Private sector firms across the North East ended 2014 on a high, with new business in the region increasing at the strongest rate in four months, contributing to a strong expansion of output. However, employment growth remains slower than that seen across the UK as a whole, which led to a solid rise in unfinished business.”

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