Cautious on North-east output rises
THE North-east was the only UK region to see accelerated economic output in January, albeit marginal, new figures have revealed.
Markit’s latest seasonally adjusted Business Activity Index increased from 58.2 in December to 59.6 last month - with output and new orders rising at rates above the UK average.
Incoming new work rose at the fastest rate since last November, while one in three firms noted an increase in activity since December.
However strong competition meant that increasing input cost pressures could not be offset by raising charges, which squeezed margins, while firms continued to cut jobs as a means of managing costs.
Business leaders were encouraged by the findings but stopped short of predicting a strong recovery amid fears of a “double-dip” recession.
Alastair Thomson, dean of Teesside University’s business school and vice-chairman of the Institute of Directors, North East, said there was a “50-50 chance” of a double-dip.
He said: “If I was to bet on it, I’d say we will have continuing difficulties before we are completely out of it. (But) I do think we are past the low point.”
Allan Little, economic adviser at development agency One North East, said the Markit report contained some “encouraging” figures, but he added: “We continue to face extremely challenging times.”
The Bank of England’s inflation report tomorrow is likely to see rate-setters trim back growth forecasts following the UK’s first positive growth figures following six consecutive months of negatives in January.
In deciding to leave interest rates at a record low of 0.5% last week following the completion of its £200bn quantitative easing programme, the Bank’s Monetary Policy Committee called Britain’s performance “sluggish” and said the recovery would be “gradual”.
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