Two reports published this week paint a picture of strong recovery for regional business and jobs.

The latest Lloyds TSB Yorkshire & Humber PMI data shows the sharpest expansion of private sector output for more than two years in May, which reflected the strongest increase in new business volumes since March, 2011.

Although it showed that job cuts continued, reductions were marginal and at the lowest level for four months. While employment fell in manufacturing, it increased in services.

Meanwhile, a survey of Northern recruitment consultants shows that the number of people placed in permanent jobs rose in May, with the pace of employment growth the fastest since February.

The PMI report showed output in Yorkshire’s private sector rose markedly in May and at the sharpest rate for 26 months. The bank’s regional business activity index rose for the third month to the highest in the country at 57.6 for both manufacturing production and services activity .

One-in-three firms reported higher activity levels, including larger volumes of new work. Overall, new orders rose markedly and at the fastest rate since March, 2011, and higher than the national average.

Input costs rose further due to higher energy prices and larger salary bills, but the rate of input price inflation was the weakest in nine months.

Lloyds TSB Commercial Banking area director Martyn Kendrick said: “Yorkshire & Humber’s private sector went from strength to strength in May, as highlighted by marked growth of both new business and overall business activity. The latest expansions were not only the strongest for over two years, but the fastest of all the 12 UK regions in the survey.

“Ongoing weakness in the labour market was the main disappointment in this month’s survey, although employment only fell marginally in May and at a slower rate than the 20-month peak recorded in April.”

The recruitment agents’ survey for KPMG and the Recruitment and Employment Confederation shows solid expansion in demand for permanent workers across the North in May.

Demand for temporary staff rose sharply. Growth in demand for both permanent and temporary staff in the North has continued for 45 months running. Employers faced the biggest fall in available candidates since December 2007 whereas the supply of temporary workers in the North increased last month for the third time. and at the quickest rate for nine months.

Salaries for permanent staff across the North increased for the 15th month running, with the rate of wage inflation accelerating to the sharpest in more than five years.

Chris Hearld, KPMG’s Yorkshire senior partner, said: “With Northern permanent placements growing at the fastest pace since February, it seems that private sector jobs are boosting the chances of economic growth.”