North East companies have reported the biggest increase in business activity in more than a year thanks to a significant boost to regional firms’ order books, according to the latest North East PMI®.

The increased activity has caused employment to rise for the first time in five months, after declining every month since June.

The latest Lloyds Banking Group North East PMI – or purchasing managers’ index – registered 53.8 in October. A reading of above 50 signifies expansion in business activity, while a reading below signals contraction

The figure represents a solid improvement in private sector output and the strongest rate of expansion in 14 months. 

Elsewhere, the weakness of the pound resulted in a surge in costs for the region’s firms, with average input prices – including critical resources such as raw materials and labour – rising at the fastest rate in over five years.

The Lloyds Bank PMI is based on responses from manufacturers and services businesses about the volume of goods and services produced during October compared with a month earlier and is the leading economic health-check of UK regions. 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: “The North East economy continued to grow in October, overcoming any EU Referendum-related concerns.

 “The region was slightly off the pace seen elsewhere in the UK, but it is moving in the right direction. The strong increase in new work seen during the month should help firms to recover some of the ground lost in July, maintaining the local economy’s recent growth spell.”