Profits in the Yorkshire region have risen to their highest for three years as manufacturing at last shows sign of joining the boom.

Figures compiled by global information company Experian in its latest corporate health check show that in the second quarter of this year, the average return on capital of major companies in Yorkshire and Humberside increased from 12.93 per cent to 13.26 per cent. The "real" level of profitability, after taking inflation into account, has climbed to a record 11.86 per cent. All this is amid signs that the upturn in the national economy is finally reaching the region's manufacturers, with engineering leading the recovery - a sector where average profitability rose from 11.59 per cent in the first quarter of this year to 12.50 per cent in the second quarter.

Packaging, which is strongly represented in North Yorkshire, along with print and paper also saw increases in profits from 12.99 per cent to 13.62 per cent.

And food manufacturing, which is particularly strong in North Yorkshire, increased from 15.17 per cent to 15.74 per cent during the second quarter. Peter Brooker, of Experian, said: "Yorkshire and Humberside had some benefit from the strength of the service sector so the recovery in manufacturing is good news for the region."

Its success was reflected in the national profit figures where profitability, after inflation, also soared to a highest-on-record 12.63 per cent. He said: "In order to achieve these results, companies have had to become more competitive by holding down prices and profits. At the same time, many have successfully preserved their profit margins by driving down average unit costs and raising productivity."

But Mr Brooker warned that even though manufacturing orders and export demand had picked up, a further 20,000 manufacturing jobs nationally were expected to be lost during the final quarter this year.

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