New business and weather boost Yorkshire economy - survey

The business activity index – which measures the combined output of the region's manufacturing and service sectors - improved markedly in February, reaching 55.3, up from from 52.0 in January.

The local economy was boosted by higher levels of new business and some positive payback following the severe-weather related slowdown in January, according to the Yorkshire and Humber PMI.

The survey showed that manufacturing outperformed services last month.

"A higher level of sales was also indicated in February, with growth of new business registered for an eighth month in a row. However, the rate of expansion was subdued, being only modest and much lower than in recent months."

Companies reporting growth described higher client activity, while manufacturers also benefited from an increase in new export sales.

Job losses in the region continued to mount in February, however, with the latest data showing a 22nd consecutive month-on-month fall in employee numbers. Natural wastage and forced redundancies led to the marked and accelerated rate of job shedding, the survey said.

"(There was] a degree of excess capacity in the region's private sector. Levels of work outstanding were reduced at the fastest pace for three months."

There was a fifth consecutive monthly increase in input costs. Higher commodity, fuel and supplier prices were all reported to be factors driving the fastest cost inflation in the region for 17 months.

Margins remained under pressure as output charges were cut slightly for the first time in three months. Competitive pressures were reported to have depressed pricing power. Discounting was centred on the service sector.

Patrick Bowes, chief economist at Yorkshire Forward, said: "It is very welcome news that regional activity levels picked up in February.

"Despite this "bounce back" after a difficult period of January trading, we hope to see some improvement in new order levels particularly in key exports markets in the coming months".