Business activity hits eight month high with fastest recorded job growth

Business activity in Yorkshire and the Humber has soared to an eight month high.

Growth witnessed was the strongest in the UK according to the NatWest Yorkshire & Humber PMI Business Activity Index.

The seasonally adjusted measure of manufacturing and service sector output hit 63.1 in February, up from 56.1 in the first month of the year.

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According to panellists, an increase in employment – which survey data showed rising at a survey-record pace in February – as well as recovering demand, supported greater levels.

Strong underlying demand conditions, in part reflecting rebounding activity at clients, was cited as a reason for improved sales performances.

The Future Activity Index remained strongly above the neutral 50.0 mark and was much higher than its historical average in February, signalling a strong level of business confidence. Only London-based businesses recorded a stronger degree of positivity of the 12 monitored UK areas.

Investment plans, new product offerings and positive forecasts regarding the economy supported growth expectations. That said, the level of optimism dipped to a five-month low.

Richard Topliss, chair of NatWest North Regional Board.
Richard Topliss, chair of NatWest North Regional Board.

Richard Topliss, chair of NatWest North Regional Board,said: “As the wave of Omicron infections faded, business activity growth across Yorkshire and the Humber surged higher during February to an eight-month high.

“The region was the best performer across the 12 parts of the UK monitored by the survey and outpaced the UK average by a notable margin.

“Further signs of positivity were seen in survey data relating to jobs and demand. Employment growth accelerated to a survey high as businesses stepped up their efforts to expand, while new orders placed for goods and services rose at the fastest rate since last summer.

“However, inflationary pressures remained substantial. While raw material prices continued to rise, according to panellists, these were compounded by rising energy bills. “We saw selling charge inflation remain unchanged from January, which was the fastest on record. Stubbornly high rates of inflation remain a notable risk to the outlook as unstable prices will add uncertainty to demand conditions.”

The seasonally adjusted Employment Index hit a fresh series high during February, signalling the fastest rate of jobs growth since data were first collected over 25 years ago. Many businesses strengthened their staffing numbers to support greater levels of activity, according to anecdotal evidence.

Yorkshire & Humber was also a top-performer when compared with the other regions, with employment growth outpacing the UK-wide average and being only surpassed by that seen for London.

Latest survey data pointed to a further build-up in outstanding business during February. The rate of backlog accumulation was sharp overall and the fastest since last October.

Supply chain disruptions and a lack of staff availability were factors commonly linked to the rise in work-in-hand. The increase in backlogs was particularly sharp at service providers.

Latest survey data signalled another month of steep cost pressures faced by private sector firms in Yorkshire & Humber. Rising prices for raw materials and fuel were mentioned by panellists, as well as rising wage pressures and utility costs.

Overall, the rate of input cost inflation edged fractionally higher from January and was substantial, but remained below the all-time high seen last November.

Prices charged for goods and services in Yorkshire & Humber continued to rise during February, with the rate of increase matching January’s survey peak. Where charges were increased, this was attributed to greater costs.

The rate of inflation was above the UK average by a notable margin and the third-fastest of the 12 monitored UK areas.

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Read More: Business activity hits eight month high with fastest recorded job growth

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