County economic growth up pre-poll
BUSINESS: The Yorkshire economy saw its strongest growth this year in May. The rate of job creation in the region hit a two-year high as business activity grew at the fastest pace this year.
The survey was conducted before the shock General Election last week, which has resulted in a hung parliament and political uncertainty.
THE YORKSHIRE economy saw its strongest growth this year in May and the rate of job creation in the region hit a two-year high as business activity grew at the fastest pace this year.
However the survey was conducted before the shock General Election last week, which has resulted in a hung parliament and political uncertainty.
It is not yet clear what impact the election result will have on the region’s businesses.
At the time of the survey it was largely expected that Prime Minister Theresa May would substantially increase her 17-seat majority.
The uncertainty could hit Yorkshire morale just as crucial Brexit talks are due to start.
Conversely it could boost it if it increases the chance of a “soft Brexit” whereby the UK retains access to the single market.
The latest regional Lloyds Bank PMI report said that Yorkshire firms linked higher staffing levels to greater demand, with new orders growing for the tenth month running.
The Yorkshire and Humber PMI registered 57.7 in May, up from April’s reading of 56.8 and second only to the East Midlands at 57.9.
Lloyds said this was due to a sharp increase in output of goods and services in the region.
A reading above 50 signifies growth in business activity, whereas a reading below shows decline.
Yorkshire’s growth in business activity was the second-fastest nationally and considerably faster than the UK average of 54.4.
However input costs, such as the price of raw materials and wages, continued to put pressure on firms, increasing for the fourteenth consecutive month.
This is likely to be passed on to customers in the form of higher prices.
Lloyds said business confidence in Yorkshire stayed strong and firms were more optimistic compared with the UK as a whole. Firms in the region attributed this to new product development, planned investment and solid demand.
Leigh Taylor, regional director for Yorkshire at Lloyds Bank Commercial Banking, said: “May saw another standout month for the Yorkshire economy, with the report suggesting it was the healthiest period overall for the region this year.
“Although input costs have risen now for 14 months, the rate of increase has slowed since February’s peak, which will be welcomed by firms.
“However, rising costs will make it all the more important for firms investing in growth to manage working capital effectively.”
He said that output prices charged by firms in the Yorkshire & Humber region rose for the sixteenth month running in May, thereby extending the longest sequence of inflation in over eight years.
“That said, the pace of charge inflation was the weakest since last August,” he added.
The level of outstanding business also rose in May, as has been the case in every month since August last year.
Firms in the Yorkshire & Humber region experienced the fast- est growth in backlogs since the research began in November 1999.
Anecdotal evidence linked the upturn in work-in-hand to stronger demand, increased new orders and constraints on capacity.
Companies in both the manufacturing and service sectors reported an expansion in outstanding business.
Output expectations for the next 12 months in the Yorkshire & Humber region remained strongly optimistic in May.
Planned investment, new product development and solid underlying demand were often cited as reasons for positive sentiment.
The degree of confidence was the most robust since January and substantially above that seen across the UK as a whole.