Business activity across the North West stabilises in December following three straight months of contraction, new data shows. Tony McDonough reports
North West businesses ended 2002 on a “more stable footing” after three consecutive months of contraction, a new survey shows.
According to the latest North West PMI Business Activity Index from NatWest, firms across the region continued to report “headwinds to demand” during December. These included client destocking and general economic uncertainty.
And the survey signalled a further easing of price pressures, albeit with rates of both input cost and output charge inflation remaining above their historical averages.
NatWest’s survey is a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors.
For December it registered in line with the 50 threshold that separates growth from contraction in December. It was up from 48.5 in November and followed three consecutive sub-50 readings.
While there was a sixth consecutive monthly decrease in intakes of new business, the rate of decline has eased notably since November, when it was the quickest for the best part of two years.
This reduction was also less marked than that recorded across the UK as a whole.
Firms’ expectations towards future activity improved for the second month running in December, recovering further from October’s near two-and-and-a-half year low.
However, confidence remained subdued by historical standards, with local businesses continuing to highlight concerns about a downturn in the economy and a squeeze on client budgets.
Rising business costs remained a feature of the survey data in December. Panel members commented on higher prices paid for food and energy, as well as citing staff pay demands and the influence of exchange rate factors.
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The rate of cost inflation remained elevated by historical standards. However, amid reports of a softening of a range of material prices, it fell further from the record high seen earlier in the year to a 22-month low and was also the weakest among the 12 regions monitored.
Firms in the North West recorded a further increase in workforce numbers in December, stretching the current sequence of job creation to 22 months. This contrasted with the broader trend across the UK as a whole, which saw a marginal decrease in staffing levels since February 2021.
Malcolm Buchanan, chair of NatWest North regional board, said: “In the context of three straight months of contraction prior to December, a PMI reading of 50 is a relatively positive result.
“Still, despite sentiment recovering further from October’s recent low, local firms remain only cautiously optimistic about the outlook amid ongoing concerns about a broad economic slowdown and a squeeze on customer budgets.”