BUSINESSES across the North-East are performing at their strongest level for 18 months, a report has claimed.

Latest figures show companies have benefited from stronger demand, with output at its best since the middle of 2015 and order books filling at their fastest pace for 20 months.

Firms have also created more jobs to cope with the clamour for services.

However, companies are being forced to increase prices at their highest rate for more than three years due to the impact of cost inflation.

The update was revealed in a Lloyds Banking Group PMI survey, which said businesses across the region have shrugged off previous struggles to compete with the rest of the UK.

According to the report, the progress of firms in the North-East represented a reading of 56.6 in December, compared to 52.2 in November.

Any number above 50 separates growth from contraction.

Leigh Taylor, regional director for the North-East at Lloyds Bank Commercial Banking, said: “The North- East has gone from being an underperforming region to one that is growing at a similar pace to the rest of the UK.

“Profit margins are under pressure due to increasing cost burdens caused by a weaker pound and increasing fuel prices.

“But with employment numbers rising slightly in December, the region is moving in the right direction.”

The findings, which took in responses from businesses across County Durham, Teesside, Tyneside and Northumberland, comes after similar reports hinted the major industry sectors were regaining some impetus.

According to the Markit/ CIPS UK purchasing managers’ index, the manufacturing, construction and service industries all enjoyed a strong December as orders helped ease inflationary pressures.

The reports said greater demand from the US, China and the Middle East had helped manufacturing end 2016 on a 30-month high, with construction output rising at its fastest pace for ten months despite “intense” cost pressures brought on by the Brexit- hit pound.

They added new business pushed the service sector to a 17-month high.