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North East business activity increases at fastest rate in 18 months

ByCharley Williams

Jan 9, 2017

North East businesses reported the strongest increase in output for 18 months in December, according to the latest Lloyds Banking Group PMI® survey.

The steep rise in business activity has led companies to increase their staff numbers in order to fulfil growing demand for goods and services. Firms’ order books were filled at their fastest rate for 20 months during December. 

The latest PMI reading for the North East rose from 52.2 in November to 56.6 in the final month of 2016. A reading of above 50 signifies expansion in business activity, while a reading below signals contraction.

Meanwhile, the rate of cost inflation facing businesses was close to its highest in more than five years, leading local firms to increase their prices at the highest rate in over three years.

The Lloyds Bank PMI, or purchasing managers’ index, is the leading economic health-check of UK regions. It is based on responses from manufacturers and service providers about the volume of goods and services produced during December compared with a month earlier. The North East findings are based on a range of questions posed to businesses across Northumberland, County Durham, Tyne and Wear and the Tees Valley. 

Leigh Taylor, regional director for the North East at Lloyds Bank Commercial Banking, said: “Over the course of the year, the North East has gone from being an underperforming region to one that is growing at a similar pace to the rest of the UK.

“Profit margins are under pressure due to increasing cost burdens caused by a weaker pound and increasing fuel prices. But with employment numbers rising slightly in December, the region is moving in the right direction as we enter the new year.”