THE economy in the North-west has grown for the 15th consecutive month but employers are still cautious about hiring new staff, according to research published today.

The North-west Purchasing Managers' Index (PMI), compiled by the Royal Bank of Scotland (RBS) with NTC Research, tracks monthly variables in the private sector such as output, new orders, employment and prices, using questionnaires sent to companies.

The July report reveals that business activity and new order levels have grown in the region, with businesses recording increased levels of demand for products in domestic and international markets.

But private-sector employment in the region declined for the fourth month running in June. And the rate of decline increased slightly since the previous month.

A number of companies revealed that reduced staff levels included the release of short-term contractors.

There were also sharp rises in input costs, although the rate of increase eased compared to the previous month.

Those surveyed reported that high prices for raw materials had been a major source of cost pressures, with particular mention made of steel.

Oil prices were also identified by manufacturers and service providers as an important factor.

The impact of heightened cost pressures was partly passed on to consumers in the form of higher average charges as companies sought to protect their operating margins.

David Jones, Royal Bank of Scotland director for commercial banking in Bolton, said: "The data continues to support the level of activity we are seeing in the local market.

"It also reinforces the messages that our customers and professional colleagues are telling us across South Lancashire.

"There is a general view of qualified optimism, which is reflected in the confidence with which many of our customers are now actively pursuing expansion and growth strategies by pushing forward with business opportunities that previously had been left on hold."