New data adds to NW economic gloom

New data out on Monday from two studies reveals a gloomy economic picture for North West businesses with little prospects of improvement for 2023. Tony McDonough reports

Warehouse, factory, business, manufacturing, economy
North West firms endured a tough November and face a difficult 2023


Two economic surveys published on Monday offer bleak reading for the prospects for the North West private sector in 2023.

NatWest has revealed the results of its latest Business Activity Index which showed signs of further weakness in demand for goods and services during November. And the Make UK/BDO Manufacturing Outlook reported prospects for 2023 remain gloomy.

According to the NatWest study input costs and output prices continued to rise sharply, in November albeit at slower rates than in recent months. 

Its headline North West PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered 48.5 in November.

This was little-changed from October’s 48.4. A reading below 50, which signals falling business activity, has now been recorded in each of the past three months. The modest decline in output was led by weakness in the manufacturing sector.

That weakness was confirmed by the Make UK/BDO Q4 Manufacturing Outlook. It states manufacturers in the North West are looking at a tough 12 months ahead. It claimed the sector is likely to contract in the face of a deteriorating economic outlook at home and abroad.

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It shows manufacturing contracting by -3.2% in 2023. This comes on the back of a forecast -4.4% contraction this year. However, Make UK stressed the number for this year is relative to a very strong 2021 which reflected the pandemic bounceback.

In the last quarter, output in the North West declined in line with the national picture at a balance of 10%, with total orders also turning negative at a balance of -14%, again in line with the national picture.

Despite this recruitment intentions remain strong in the North West given labour shortages and the scramble to attract and retain talent.

Dawn Huntrod, region director for Make UK in the North West, said: “There is simply no sugar-coating the outlook for next year and possibly beyond.

“Even for a sector as resilient as manufacturing, these are remarkably challenging times which are testing even the best and most successful of companies to the limit.


Malcolm Buchanan
Malcolm Buchanan, chair of NatWest’s north regional board


“As a result, while the Chancellor has already brought in some welcome measures to help ease the cost pressure on companies in the short term, it may not be too long before we see him having to bring more firepower to ease cost pressures.”

NatWest reported that higher energy costs, a weak pound and rising salaries each contributed to an ongoing sharp increase in businesses’ operating expenses during November.

The rate of input price inflation ticked down for the sixth month in a row and was the lowest since May 2021. However, it was still well above its historical series average.

Malcolm Buchanan, chair of NatWest’s north regional board, added: “The North West business activity index remained in sub-50 contraction territory for a third successive month in November, signalling a sustained slowdown. 

“Firms’ input costs and output charges continued to rise sharply. But the fact the rates of increase have slowed offers a glimmer of hope that underling price pressures are easing.”

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