By Daniel Hunter

Business activity rebounded in January, according to the latest Lloyds TSB Regional Purchasing Managers’ Index (PMI), compared to the slowdown seen at the close of 2012.

At 51.6, up from 50.1 in December, the seasonally adjusted index measuring overall business activity moved further above the 50.0 mark that represents static economic activity. Although the latest figures showed only a moderate pace of expansion across the regions overall, this was the highest level of output growth seen since September 2012.

Higher levels of business activity were recorded in eight of the nine English regions in January. This was an improvement on December’s results when only five regions recorded business activity growth. Yorkshire & Humber was again the strongest performing area in terms of output growth, with the strongest rate of expansion in the region since August 2012.

Meanwhile, the East Midlands and the South East saw returns to output growth in January. Only the North East bucked the overall trend, with business activity declining at the most marked pace for six months because of a renewed fall in manufacturing output.

The overall rebound in business activity across the English regions at the start of the year reflected improved volumes of incoming new work. Six of the nine regions saw an increase in new business during January, with the greatest rises seen in London and Yorkshire & Humber, at 53.9 and 52.8 respectively. Companies that saw an increase in new orders mostly cited improvements in business confidence and the launch of new projects as reasons for this upturn.

Increased client demand also helped spur a return to net job creation across the English regions, with the South East and Yorkshire & Humber reporting the greatest improvements in employment. Staffing levels remained stable in the North East and North West, while the South West witnessed a moderate drop in workforce numbers.

Despite some heavy snowfall across much of the country in January, the vast majority of the English regions continued to clear backlogs of work, which suggests there was a general underlying lack of pressure on operating capacity. The two exceptions to this overall trend were the East of England and the North East, which both saw a build-up of unfinished business.

Businesses across all the regions continued to feel inflationary pressures in January, largely fuelled by higher energy bills and raw material prices. The North West recorded the greatest rise in input prices, while the slowest increase was recorded in Yorkshire & Humber.

Operating margins remained under pressure across all regions, because of a general trend of not fully passing on higher costs to customers. Despite this, prices charged to customers did increase slightly in all the English regions, and this was the first month that this has been recorded since July 2011.

“Despite fears that private sector output at the start of the year would be disrupted by the heavy snowfall in January, the latest survey revealed an upturn in business activity across most of the English regions," David Oldfield, Managing Director, SME & Mid Markets banking, Lloyds Banking Group, said.

“Yorkshire & Humber led the way in January, with the fastest rate of output growth of all the English regions, and both the East Midlands and the South East saw a welcome return to output growth last month. The only exception to the brightening regional economic picture at the start of 2013 was the North East, which saw moderate declines in both business activity and incoming new work.

“Solid rises in private sector staffing levels across the South East meant that overall employment levels remained positive during January, which will come as welcome news following recent job cuts announced in the retail sector. Combined with an increase in new work orders at the start of the year, this will bolster hopes that client demand and opportunities for growth will steadily improve over the course of 2013.”

Join us on
Follow @freshbusiness