New business up but pace slowing

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Yorkshire firms have recorded a rise in new business for the 13th month running, but the pace of growth has slowed from July’s nine year high, according to a new study.

The latest Lloyds Bank Purchasing Managers Index also reveals that although employment continued to rise, the increase was fractional and slower than across the rest of the UK.

Backlogs increased for the third month running and rose faster than at any time since studies began 15 years ago, due to increased order volumes and an unanticipated spike in demand.

Martyn Kendrick, Lloyds Bank Commercial Banking’s area director, responsible for small and medium sized enterprise banking in Yorkshire, believes job creation could accelerate.

“Despite the sharp increases in activity and new orders, job creation slowed in August, but the third successive rise in backlogs indicates that spare capacity is declining in the wake of strong activity growth,” says Mr Kendrick.

“If production and new orders continue to expand at the current pace, it cannot be long before employment follows suit.”

Mr Kendrick added: “The sharp pace of private sector expansion seen since the spring continued into August across Yorkshire and Humber.

“The rate of growth slowed from July’s record high and was lower than that recorded for the UK overall, which rose at a pace not seen in 16 years.

“However, business activity in Yorkshire and Humber remained strong and the region continued its ten-month sequence of growth.”

Companies surveyed blamed the weak pound and rising fuel prices for increasing import costs for the fourth month in a row.