Service sector pushes North East private sector firms

THE service sector has helped push private sector companies in the North East to their most healthy growth since May last year.

According to the Lloyds TSB North East Business Activity Index for January, the region registered its fastest pace of growth for eight months despite near-stagnation in the manufacturing sector. The index records the combined output of the service and manufacturing sectors.

Growth is deemed to have taken place if the index returns a reading of over 50. January's figure was 53.4, up from 51.4 in December. Panelists said there was not a major change in the number of new orders received, and the rise was down to work on outstanding business.

Craig McNaughton, area director for Lloyds TSB Commercial in the North East, said: "January's PMI data signaled a bright start to 2012 for businesses in the North East. The region's labour market reaped the rewards of robust business activity growth, showing the third strongest increase in hiring of all the UK regions. Concerns will remain over weak new order figures, but with the strengthening in demand seen across the UK, businesses should remain cautiously optimistic."

Lloyds TSB said the North East had brought in staff at a "solid pace" above the UK average. In fact, it said the North East had the third-fastest hiring rate of all UK regions, while it added cost-inflation is now at its second-lowest level in nearly two years.

The North East was also only one of two regions that registered an acceleration in charge inflation in the period. While many companies remain nervous about putting up prices in a difficult market, some said they were compelled to do so to offset rises in their own costs.

Copyright NCJ Media 13th February 2012