Latest data from NatWest reveals manufacturing and services firms across the North West continue to see ‘modest’ growth despite strong headwinds. Tony McDonough report
Business across the North West saw “modest growth” in business activity during August – one of only three UK regions out of 12 to do so.
According to the latest regional analysis of the manufacturing and services sectors from NatWest, combined output in the North West was 51.8 in August. This was slightly up from July’s 51.1. A score above 50 means growth while below means contraction.
Out of the 12 Uk reigned monitored by the monthly survey, just two others – London and Yorkshire & Humber, also saw growth. However, demand for goods and services remained “strained” and there was a further sharp rise in prices.
Business confidence in the region declined, while the pace of job creation slowed to an 18-month low. After decreasing in July – albeit marginally – for the first time in 17 months, inflows of new work across the North West private sector broadly stagnated during August.
The result was in line with the UK-wide trend. Anecdotal evidence pointed to increased difficulty securing new work due to cost of living pressures and a general economic slowdown.
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August data showed a drop in confidence among firms in the North West towards the year-ahead outlook for activity. After recovering somewhat in July, expectations moved back closer to June’s 25-month low.
They were below the historical series average (since 2012). Concerns about weaker demand conditions and a potential contraction in the economy weighed on companies’ growth forecasts.
Employment levels continued to rise across the North West private sector during August, albeit at a slower pace. In fact, the rate of job creation was in fact the slowest seen since the current upturn in workforce numbers began in March 2021.
Latest data showed further evidence of easing capacity pressures across the North West’s private sector. August saw another notable decline in backlogs of work (ie orders received but not yet completed) at firms.
The decline was the fourth in the past five months and broad-based by sector, albeit slightly less than marked in July. Business expenditure continued to rise sharply during August, with surveyed firms commenting on increases in energy bills, wages, food prices and charges from suppliers.
Malcolm Buchanan, chair of north regional board for NatWest, said: “In the context of a slowdown in the wider economy, growth of business activity in the North West, albeit only modest, is a positive result for the region.
“However, there are a number of warning signs in the latest PMI survey, which point to an increasingly difficult operating environment for local firms.
“Companies have now gone two months without any growth in new business and are quickly eating into their backlogs of work. Indeed, firms are less optimistic about the outlook and have slowed the rate of job creation accordingly.
“With businesses spending more on energy and inputs generally, they have been left with little choice but to raise prices and could well take an even more cautious approach to hiring going forward.”