Private sector activity in the Yorkshire & Humber region increased at a ‘robust’ rate at the end of the second quarter of 2016 – even before the Brexit result was known, with 90% of survey responses were received before 24th June.
This was underpinned by the sharpest expansion in new orders since October 2015. However, employment fell for the fourth consecutive month, albeit only marginally. Meanwhile, cost burdens rose to the greatest extent in nearly two-and-a-half years, leading to a further increase in prices charged.
The headline Lloyds Bank Yorkshire & Humber Business Activity Index – a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors – posted at 54.0 in June, down from 55.1 in May, thereby signalling a slower rate of expansion in business activity in the region. However, the rate of increase was stronger than both the long-run series trend and the UK average. According to panellists, success in gaining new contracts led to the boost in output. At the sector level, both manufacturers and services firms saw growth in activity, with the latter registering the sharper expansion.
Despite growth in both activity and new orders, private sector firms were cautious towards their hiring policies, with employment declining for the fourth month running. However, the rate of job shedding was only fractional overall.
Volumes of outstanding business decreased in June, signalling on-going spare capacity in the region. That said, the rate of contraction was only modest overall.
Leigh Taylor, pictured, Lloyds’ regional director for SME Banking in the North East and Yorkshire, said: “Business activity at Yorkshire & Humber private sector firms increased at a robust rate at the end of the second quarter of 2016, despite the uncertainty surrounding the EU referendum vote.
“This was driven mainly by a marked expansion in new orders, which rose at the quickest rate since October 2015. However, firms remained cautious towards their hiring policies, with employment declining for the fourth consecutive month. Meanwhile, the weakness of the pound contributed to the fastest increase in input prices since January 2014.”