The north west has seen its fastest rise in business activity for three month, according to a new study.

The Lloyds Bank Purchasing Managers Index (PMI) report for June showed activity growth of 54.7 in July, up from June’s reading of 53.8 and slightly above the UK average of 54.1.

A reading above 50 signifies growth in business activity, a reading below signals decline.

To meet this demand, firms took on extra staff at a faster rate than the UK average and at the quickest pace experienced locally in the last three months.

Increased raw material costs due to the weak pound contributed towards further rises in input prices. These were partly passed on to clients through higher prices.

The Lloyds Bank PMI is based on responses from manufacturing and services businesses about the amount of goods and services produced during June compared with a month earlier.

Martyn Kendrick, regional director for the north west at Lloyds Bank commercial banking said: “After observing a pattern of slowing business activity growth during the previous three months, it’s encouraging to see an acceleration in July.

“New orders picking up pace is another positive indicator for the region’s economy, showing healthy demand for local firms’ goods and services. Businesses need to make sure they have the capacity and working capital necessary to take advantage of this opportunity.”