OUTPUT levels for North-west manufacturing and service sector firms expanded during August, a new survey reveals.

The North-west PMI (Purchasing Managers' Index) report showed that the pace of growth was faster than that recorded in July.

But with input costs rising and output charges falling, August saw further pressure on the profits of regional companies.

The report is produced for The Royal Bank of Scotland by NTC Research.

It features original survey data collected from a representative panel of 200 companies.

Margaret Holligan, Senior Economist at The Royal Bank of Scotland, said: "Business activity in the North-west continued to expand during August despite firms struggling to gain new contracts to replace those that had been completed.

"August's survey also highlighted acute pressure on firms' profit margins, with input prices rising sharply at a time when companies have been unable to pass on the associated costs to clients."

The survey also showed that labour force levels in the region have now contracted for 17 consecutive months.