North East grows least, but still best in years

More promising signs have emerged on the economic recovery after firms in England and Wales recorded a strong pick-up in activity during July

Shoppers on Northumberland Street in Newcastle
Shoppers on Northumberland Street in Newcastle

More promising signs have emerged on the economic recovery after firms in England and Wales recorded a strong pick-up in activity during July.

Of the nine English regions, companies in the North East saw the least marked rise in business activity (56.4, with 50 being no change) but growth here still hit a 28-month high.

And new research says confidence on the jobs front nationally is at its highest since the recession five years ago, though cuts could continue in the public sector.

Meanwhile, a survey by accountants BDO also highlighted better short-term business prospects nationally.

Lloyds TSB said its index for all English regions rose to 60 last month, the best since the survey began in January 2001.

Lloyds business banking director David Oldfield said the findings suggested the summer upturn had strengthened.

“Most importantly, all regions across England and in Wales have seen a return to job creation, as companies look to meet greater business requirements and confidence increases in the wider economic outlook.”

Growth in English firms was fastest in the North West (62.3) then London (61.8). Respondents reported more domestic business and consumer spend, with signs of better exports. BDO’s Output Index, which predicts short-run turnover expectations and reflects the current experience of UK firms, hit a 26-month high of 96.8 in July, from 94.9 in June, the fifth consecutive increase.

Output in services, which make up 75% of the economy, rose from 94.7 in June to 96.5, while manufacturing rose from 95.7 to 98.3 – both above the crucial 95.0 mark that indicates growth.

BDO’s Optimism Index, which predicts performance in two quarters’ time, moved up from 94.3 in June to 95.6, a sixth consecutive rise and its highest since April 2012.

A survey of more than 1,000 managers by the Chartered Institute of Personnel and Development predicted jobs growth for the sixth quarterrunning.

Private firms were most positive, but public sector managers were more likely to expect job cuts.

The study, before official unemployment figures on Wednesday, is the latest recent report predicting jobs growth.

CIPD chief economist Mark Beatson said: “These results suggest we should see further jobs growth over the summer and autumn and hopefully reflect a degree of optimism about growth prospects for 2013. This is welcome news for job seekers.”

Employers predict wage rises of 1.7% – below inflation – in coming months. Mr Beatson said with turnover low, retention was unlikely to be a pressing issue. But as the job market improved, employers would have to adjust staff planning, development and reward.

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