North East businesses have reported a sharp recovery in business activity in March, according to the latest figures from the Natwest.
The Natwest North East Business Activity Index, which measures the month-on-month change in output across the region's manufacturing and service sectors, rose from 49.9 in February to 55.0 in March.
The figure is the highest reading for six months, suggesting that demand for goods and services has increased, leading to businesses producing more.
The survey also signalled that North East firms remain optimistic about the year-ahead with 61% of respondents forecasting growth for their business.
Much of the increase was put down to businesses gearing up for the easing of coronavirus restrictions and the expected end of the national lockdown.
The increase in production also led to businesses hiring more staff.
Richard Topliss, chairman of NatWest North Regional Board, said: "Private sector businesses in the North East registered a sharp improvement in demand conditions in March, with firms noting that preparations for the lifting of COVID-19 restrictions had boosted sales. Rates of growth in business activity and new orders were the fastest recorded since September 2020.
"As a result of increased pressure on existing capacity, firms in the North East lifted workforce numbers for the first time in 33 months and at the quickest pace since November 2017.
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"Meanwhile, companies saw a survey-record increase in input prices amid higher raw material and transportation costs. This was partially passed on to clients, with prices charged for goods and services also rising at the fastest pace on record."
Employment levels among businesses in the region increased for the first time since June 2018. The increase was described as "moderate" but was still the fastest since November 2017.
Some companies said that hiring was made in response to increased orders.
Despite the good news, North East businesses pointed to a further rapid increase in average cost burdens in March, with input prices rising at the fastest pace since data became available in January 2001. The increase was put down to higher raw material and transportation costs.
The overall rise in cost burdens was the second-fastest growing in the 海角视频, behind Northern Ireland.
Increased costs went hand-in-hand with an increase in average prices for goods and services in the North East, which rose for the seventh month in a row. The rate of inflation also accelerated to the fastest in the series' history.