BUSINESS conditions for Yorkshire firms remain strong, says a survey today.

But the latest Purchase Managers’ Index from Lloyds TSB warned that private sector firms continued to face rising costs.

Output and new business levels remained strong during March, the survey said – with the rate of new order growth the fastest since April, 2004.

The headline Business Activity index, which measures the combined output of the region’s manufacturing and service sectors, stood at 57.9 in March against 58.2 in February, but “indicated a strong increase in activity levels”.

Although output growth eased to its weakest in 2011 so far, the latest reading was stronger than the UK average.

However, job creation stood at a three-month low.

Phil Hawker, area director for Lloyds TSB Commercial in Yorkshire, said: “The Yorkshire and Humber private sector continued to grow strongly in March, with the average rate of output growth recorded in the first three months of 2011 the fastest for any quarter since the fourth quarter of 1999.

But Mr Hawker said rising costs in areas such as energy and raw material and the impact on profitability and growth caused concern that these positive trends might by difficult to sustain.