However, companies in the region, which includes Northumberland, County Durham, Tyne and Wear and the Tees Valley, continued to cut jobs, bucking a wider UK trend for job creation.
The North East PMI rose to 53.7 in September, from August’s 50.9, signalling the strongest increase in activity since August 2015. Growth was primarily seen in the region’s service sector.
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 services businesses about the value of goods and services produced during September compared with a month earlier.
In line with increasing output, new business also rose at a sharper rate during September thanks to stronger demand from both domestic and foreign markets.
Despite this accelerated growth, however, companies continued to reduce their workforce numbers during September, although the rate of job cuts eased since August.
Meanwhile, business input costs rose at the strongest rate in five years during the month, as the weak pound continued to drive up the price of imports.
Leigh Taylor, regional director for the North East at Lloyds Bank Commercial Banking, said: “The end of the third quarter saw companies in the North East spring back into life, with the improvement in the region fuelled by solid growth of business output and rising demand.
“This is in sharp contrast to the period running up to and immediately after the EU Referendum, when new orders in the North East saw eight months of contraction.
“It would now appear that the slump in July was a temporary soft patch rather than the beginning of a serious downturn.”