HOPES for economic recovery in the East of England have been lifted by a survey showing that employment in the region increased in March for the first time in nearly two years.

Data contained in the latest Purchasing Managers’ Index suggests that the region’s economic recovery accelerated last month, with new businesses growing at the fastest pace in eight months.

Employment has risen for the first time since April 2008, albeit only slightly, with the increase in staffing levels being driven by the manufacturing sector.

Input costs for companies in the East of England have continued to increase sharply, and output prices have also risen each month since September 2009, with the latest increase the fastest in a year and a half.

Although still slightly below the UK average, strengthening demand saw the number of new orders and output rise for the 11th consecutive month in the region with the overall business activity index reaching 55.3 in March, up from 53.9 the previous month.

Across the UK economy as a whole, employment did not increase last month but private-sector activity grew.

Andrew Harker, economist at Markit, which produces the PMI study, said: “Although output in the East of England continued to rise less quickly than the UK economy average, sharp new order growth suggests that this divergence may begin to narrow in coming months. An increase in employment, albeit only modest, also bodes well for the future.”

John Dugmore, chief executive at Suffolk Chamber of Commerce, said: ‘’The East of England PMI report shows some promising signs of recovery and growth, which is reflected in the feedback we are receiving from many of our chamber members. That said, whilst confidence is returning, albeit from low levels, there is still uncertainty, based around such things as the upcoming General Election and anticipated deep spending cuts.”

The chamber survey also indicated that “critical indicators” such as investment in plant and machinery and cash flow remained still remained negative, he added.

Celia Hodson, chief executive at the Choose Suffolk economic partnership, said: “This is an encouraging document and principally is in line with our pan-Suffolk findings.

“Manufacturing is the fourth highest employment sector in the county, and we are encouraged to see increased levels of interest in niche manufacturing, alongside a renewed interest from the Far East, particularly Malaysian markets looking at all forms of recycling, including steel.

“The reduction in the unemployment figures and a decrease in the number of 16-18-year-olds in the NEET (not in employment, education or training) category also show that business confidence is returning.”