Business output in the North West is in positive territory for the first time since February, a new report says, but the recovery from the coronavirus crisis is still in its ‘infancy’. Tony McDonough reports
Business activity across the North West has returned to positive territory for the first time since February – but the recovery from the COVID-19 crisis is still in its “infancy”.
According to NatWest’s latest Business Activity Index, the rise in new activity among firms in the region was led by the manufacturing sector and was the steepest recorded since January 2018.
The 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 57.4 in July, up from June’s 48.4.
This was the first reading above the 50 no-change mark since February, indicating a further marked improvement from a record low of 19.7 at the height of the epidemic in April as businesses continued to resume operations.
The picture is consistent with that for the UK as a whole, with local businesses commenting on the impact of the wider reopening of the economy.
Hopes of a recovery in activity continued to broaden across the North West private sector in July, with business confidence in the region picking up for the fourth month in a row (from a record low in March) to the highest since January.
By sector, local manufacturing firms remained more upbeat about the year-ahead outlook than their services counterparts. Latest data showed a further (albeit fractionally slower) decline in employment across the North West private sector in July.
With activity often still down on pre-COVID levels, firms reported redundancies and the non-replacement of leavers amid efforts to control costs. The use of the Government furlough scheme continued to help curb overall job losses, however, with the decline in payroll numbers in the North West remaining slower than the UK average.
Richard Topliss, chair, NatWest North Regional Board, said: “The recovery in the North West private sector is still in its infancy, but the latest data nevertheless showing the regional economy to be making positive progress. However, activity remains subdued particularly in the services sector where COVID-19 and associated containment measures continue to disrupt businesses and suppress demand.”
Despite cutting workforce numbers during the month, firms in the North West had more than sufficient capacity to meet demand, completing orders at a faster rate than they received them.
Input prices faced by firms in the North West rose at a faster rate in July, following only a fractional increase in June and back-to-back declines in the two months prior to that. An uptick in fuel prices was a factor, according to reports from surveyed firms.
Mr Topliss added: “Until now the recovery in the North West has followed a similar course to the rest of the UK, so with renewed lockdown measures in the local area it will be important to see whether the PMI highlights any divergence in activity, employment and business confidence going forward.”