Manufacturing leads Yorkshire’s economic recovery, says report

DEMAND is increasing for firms across the region with manufacturing leading the return in new orders.

According to the latest Markit Yorkshire purchasing managers’ indexes (PMI) report output growth last month was again robust.

The headline Business Activity Index, which measures the combined output of the region’s manufacturing and service sectors, recorded 54.1 although the reading was the lowest in three months and well below September’s UK average overall growth.

The region’s manufacturers led the way with services lagging behind in terms of growth. A similar pattern occurred for new orders with overall growth down since September but remaining robust and the relatively stronger performance seen in manufacturing.

Companies reported success in converting leads into hard business wins with demand for the region’s goods and services reported to have strengthened.

Further declines in employment and backlogs were signalled during October indicating the continuation of excess capacity in the region.

Levels of work outstanding fell for a 20th consecutive month and again at a steep pace. Employment was down for an 18th month in a row although the rate of contraction was only modest and the slowest in this period.

In some instances, employment was increased in response to higher new order and output requirements.

Input costs in the Yorkshire private sector rose slightly for the second time in three months during October.

Companies reported that the prices of energy and oil-related items had increased. However, fragile product markets enabled a number of companies to negotiate better prices with suppliers.

Output charges fell for an 11th successive month with the rate of deflation steeper than the UK average. Market competition and efforts to move stock underpinned the latest decline in output charges.

Paul Smith, senior economist at Markit, said: “Although activity growth lost some further momentum in the latest survey period continued expansion of the Yorkshire private sector in October should be viewed in the context of the rapid declines seen around a year ago.

“Moreover, private sector expansion was steeper than the series average, which bodes well for future employment prospects if this rate of expansion can be sustained.”

The Markit Yorkshire PMI features original survey data collected from a representative panel of companies based in Yorkshire and operating in both manufacturing and service sectors.

The survey forms part of a series of regional surveys published by Markit Economics and is derived from the national PMI surveys produced by Markit for the Chartered Institute of Purchasing and Supply.