Key points:
- Activity and new business continued to rise.
- Companies took on extra staff for second time in three months.
- Input price inflation remained steep; competitive pressures restrict pricing power.
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Summary:
The Yorkshire & Humber PMI® indicated a continued expansion of the region’s private sector during June, with both activity and new business rising at marked rates. Current and expected output growth encouraged a number of companies to take on additional staff, although margins remained under pressure following another marked increase in average operating costs.
The seasonally adjusted Business Activity Index posted 56.6 in June to indicate higher output for a thirteenth successive month. Moreover, despite easing further from April’s ten-year high, the rate of growth signalled by the index remained marked and above the UK average. Both manufacturers and service providers indicated increases in output, with the latter registering the steeper growth.
Companies widely attributed the latest rise in activity to a solid increase of incoming new business. There were reports of firmer underlying demand, with manufacturers also noting solid gains in orders from abroad, supported by rising levels of global trade.
With trends in output and new orders remaining positive, a number of companies chose to add to their payrolls in the latest survey period. Although only modest, June data marked the second time in three months in which private sector staffing levels have been raised.
A combination of higher capacity and improved efficiency enabled companies to keep on top of overall workloads in June. Latest data showed that backlogs of work outstanding declined slightly, following two months of growth.
June’s survey showed continued inflation of average input prices. The rate at which costs rose was again steep, albeit weaker than the twenty-month high registered in May. A wide variety of inputs were reported to have risen in price including chemicals, metals, oil and plastics.
A number of companies sought to protect margins by raising their own output charges. However, competitive pressures continued to restrict pricing power, which limited the degree to which average tariffs rose in the latest survey period.