THE region is pulling itself out of recession quicker than other parts of the UK, according to new private sector output and job creation figures.
Although output and new business growth rates slowed from April, they still expanded in line with or faster than the national picture, according to the monthly PMI study by financial information services company Markit.
The study’s benchmark Business Activity Index – which measures a combination of the manufacturing and service sector output– hit 56.4 for the North East.
The figure – in line with the national average – was the tenth consecutive monthly rise. Markit economist, Gemma Wallace, said: “Business conditions in the North East continued to improve at the start of the second quarter.
“Although weaker than in March, both output and new business growth were marked and faster than their pre-downturn trends. Consequently, job creation in the region accelerated and firms’ pricing power improved.
“Charges rose at a moderate pace that was slightly above the national average. This was in contrast to input cost inflation, which remained weaker than the UK average despite accelerating to a sharp pace.”
More than a third (35%) of PMI panel members in the North East reported a sharp rise in new business.
And the region’s business expanded at the fastest rate since December 2007, bucking the national trend.
The strong regional picture led to a quarter of businesses on the PMI panel appointing new staff.
The report said job creation in the North East was now “robust” and had hit its highest level for 28 months.
All English regions reported rises in employment for the first time since August 2007 but the North East was slightly ahead of the average.
Tony Sarginson, from manufacturers’ organisation the EEF, said: “The PMI data joins a host of recent surveys showing a solid, expansion of manufacturing activity in the North East in April, getting the second quarter off to a good start.
“EEF believes much of this will be down to an export-led recovery. Buoyant numbers from across Europe, the UK's largest market, provide some confidence that together with a weaker exchange rate, the recovery across the sector is looking more sustainable. However, the outcome of the election and the market reaction to it remains the big unknown on the horizon.”
Ross Smith, head of policy and research at the North East Chamber of Commerce (NECC), said the picture was “encouraging”.
But he warned: “North East businesses are clearly doing a tremendous job to deliver the recovery, but it remains fragile and can't be taken for granted.
“It's by no means inevitable or automatic that this will continue, especially as public spending cuts start to take effect.
“Very careful management of the economy is needed to help our firms in sustaining this performance.”
North East businesses increased their prices at a “moderate” rate to protect profit margins, but one which was nonetheless above the UK average.
By Karen Dent, The Journal May 2010
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