BUSINESS activity in the North East slid last month at the fastest rate for more than three years after new orders fell for the fifth month running, says a respected report.
Staff numbers and backlogs of work decreased as a result of the deceleration, according to the Lloyds TSB North East Business Activity Index which charts manufacturers and service firms.
Craig McNaughton, area director for Lloyds TSB Commercial in the North East, said: “The North East saw its sharpest decline in business activity since February 2009, as new order intakes declined further in July.
“Job losses persisted as a result, while backlogs of work also decreased. Price pressures remained muted, with both input costs and output charges showing little change.”
Companies also reported that average input costs decreased for a second month running, while output charges increased marginally.
July data pointed to another decline in new business volumes, extending the current period of contraction to five months. The rate of decline in new work was solid, albeit slower than in June. Companies commented on weak demand conditions.
In line with the trend observed since May, North East private sector firms reduced their staff numbers over the month. The rate of job shedding was only modest, however, and slower than one month previously.
Volumes of work-in-hand (but not yet completed) decreased in July, extending the current period of reduction to six months. The rate of backlog depletion was solid, albeit the weakest since April.
Average input costs decreased for the second month running in July, although the rate of decline was only slight. Where input prices fell, this was generally linked to lower fuel costs. There were also reports of reduced prices paid for a range of raw materials.
Output charges set by private sector firms increased for the first time in three months during July. However, the rate of output price inflation was only marginal. Survey participants reportedly adjusted charges higher as a result of strong input cost increases.