ALL the indications are that the York is outperforming the Yorkshire economy.

The latest figures from the York business survey, carried out by the City of York Council's economic development unit, indicate that unemployment is below both regional and national rates and that turnover in the city remains buoyant.

The revelation comes in the wake of praise for Yorkshire's economy from a top international banker.

Tom Vosa, chief economist for Europe with National Australia Bank, Yorkshire Bank's parent company, has predicted that Yorkshire will have outperformed the rest of the UK by far over the course of this year.

Addressing leading business figures at a seminar at the bank's regional business centre in Leeds, Mr Vosa said that Yorkshire had been top of the UK's growth league since 2003 and looked set to be the strongest expanding region this year, with gross domestic product at about 4.5 per cent - 1.5 percent above the UK average.

He said: "The boom in the construction industry really kick-started the region's economic growth and this continues, not only in the housing market but across the whole building sector."

This, he said, led to a fall in unemployment, with Yorkshire's jobless rate of 4.3 per cent being about 0.3 per cent below the national average.

Bryn Jones, head of York's economic development, said: "Although our York calculations were made on employment and turnover, it would seem to reinforce all he is saying."

But Mr Vosa warned that the next year could be more difficult, with interest rates set to peak at five per cent in May and tentative signs already appearing of lower credit demand, new orders and output.

"The housing market may well be at its peak and the effect of public spending in stimulating activity and job creation could now have run its course.

"Manufacturing, which has been in recession nationally for two years, remains the largest sector in the region by output, and its relative weakness is the main concern. Its exports should be helped by a weaker sterling, but a lack of demand in the eurozone will hamper a recovery."

Meanwhile Tony Wood, the senior economist at the Royal Bank of Scotland, was more confident about the future, predicting that "robust growth" would continue into 2005.

Mr Wood was addressing a Royal Bank of Scotland and Pinsents "property view" seminar at Rudding Park Hotel in Harrogate on Monday, when he predicted that improving demand would continue to make property an attractive investment.

Updated: 10:33 Thursday, November 25, 2004