Employment growth hits a two-year high
Demand increasing for Yorkshire firms
EMPLOYMENT GROWTH in Yorkshire has hit its highest level in nearly two years amid strong demand for local goods and services, according to the latest Lloyds Bank Regional PMI.
Employment growth in the region jumped to a 22-month high in April and both business activity and new orders showed growth.
Yorkshire firms hired staff at a faster rate than the UK average last month to meet growing demand for their goods and services.
Leigh Taylor, regional director for Yorkshire at Lloyds Bank Commercial Banking, said: “Yorkshire’s economy is on a strong footing, which should be able to withstand any uncertainty created as the UK realigns itself economically and politically in the coming months.
“While April saw another month of increased input costs, it’s reassuring to see a continued easing in the pace of inflation. With employment, business activity and new orders on the rise, firms are right to be optimistic about the months ahead.”
The Yorkshire & Humber PMI registered 56.8 in April, which shows business activity growing but at a marginally slower pace than the previous month. A reading above 50 signifies growth in business activity whereas a reading below indicates decline.
Inflationary pressures contributed to another month of growing input costs for firms, although the rate of increase slowed on the previous month.
Firms are passing their increasing cost burden on to customers, with selling prices growing at the fastest rate in almost nine years.
Lloyds said local firms remain optimistic about the outlook for the next 12 months, with more businesses expecting higher levels of activity in the next year than the UK average.
The Lloyds Bank Regional PMI, or Purchasing Managers’ Index, is one of the leading economic health-check of the UK regions. It is based on responses from manufacturers and services firms about the amount of goods and services produced during April compared with March.
The latest data comes at a time when households are facing a further jump in inflation as the Brexit-hit pound, utility price hikes and the timing of the Easter holidays drive up the cost of living
The Consumer Price Index (CPI) measure of inflation is expected to reach 2.6 per cent in April – the highest rate since September 2013 – when official figures are released on Tuesday.
It would mean the squeeze on consumer spending continued last month following a temporary respite in February and March when CPI paused at 2.3 per cent.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said CPI could even reach 2.7 per cent, with upward pressure coming from the airline industry.
Airline prices are expected to have soared last month because the Easter holidays fell on April 16 this year rather than March 27 in 2016.
He said: “Prices for airline travel tend to rise very sharply around the Easter holidays, which will add 0.2 per cent to the inflation rate.”
The way the Office for National Statistics measures prices means Npower and Scottish Power’s decision to increase gas and electricity prices in March will also have an impact on April’s CPI rate.
“Government changes to vehicle excise duty in April also made it more expensive to buy a new car than before,” added Mr Tombs.
“Retailers will be continuing to pass on higher import prices to consumers, adding another 0.1 per cent to the rate as sterling’s shock comes through.”
The Bank of England said in its latest inflation report that CPI would peak at 3 per cent later this year as the pound’s slump since the Brexit vote causes price tags to tick higher.
Despite inflation’s upward march, the Bank’s Monetary Policy Committee voted to keep interest rates unchanged on Thursday, with outgoing policymaker Kristin Forbes remaining the sole dissenter.
However, the minutes suggested the next move in rates would still be a rise, with other MPC members repeating that it would take “little further upside news” to consider joining Ms Forbes in voting for a hike.