Private sector activity growth reaches four-month high in Yorkshire & Humber

Private sector activity growth accelerated to a four-month high at the start of the final quarter of 2015, according to the Lloyds Bank October PMI report.

This acceleration was due to a marked expansion in new orders, the fastest since July. As a result, growth in employment picked up to the quickest in four months, but both input and output prices declined.

At 56.7, up from 53.0 in September, the seasonally adjusted Lloyds Bank Yorkshire & Humber Business Activity Index signalled a stronger expansion in activity at Yorkshire & Humber private sector companies.

In addition, the rate of increase was the fastest since June and quicker than the UK-wide trend for the first time in four months. According to panellists, success in gaining new international clients and a rise in sales were the main factors behind the latest expansion in activity.

Supporting stronger activity growth was a sharper expansion in new business. The rate of increase was the fastest since July and quicker than the UK average for the first time in four months. Several firms linked the latest expansion to new export contracts won.

Reflective of marked expansions in both activity and new orders, private sector firms hired additional staff in October. Furthermore, the rate of job creation was the sharpest since June. However, the latest expansion was still weaker than seen at the UK level.

Volumes of unfinished work was also compiled in October. Greater work-in-hand was attributed by companies to a marked increase in new business placing pressure on capacity. In contrast, backlogs declined slightly across the UK as a whole.

Lower raw material costs, particularly oil and metal-related products, led to reduced average input prices, according to survey participants. Furthermore, the rate of decline was the sharpest since March.

As a result of lower input prices, private sector firms were able to reduce their selling prices in October. As well as a decrease in purchasing costs, firms mentioned increased competition from their European counterparts driving down charges.

Commenting on the Lloyds Bank Yorkshire & Humber PMI survey, Leigh Taylor, area director for SME Banking in the North East said: “Private sector activity growth accelerated to a four-month high at the start of the final quarter of 2015, supported by a strong expansion in new orders. Furthermore, both growth in activity and new orders was sharper than the respective UK averages, reversing the trends seen in the prior month.

“Subsequently, the rate of job creation increased to the quickest since June. Meanwhile, lower raw material costs, particularly oil and metal-related products led to a decline in input prices. This contributed to a decline in prices charged by private sector firms in the Yorkshire & Humber region for the third straight month.”

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