North West firms see growth despite staff shortages

Latest data from NatWest showed a growth in business activity in the North West in September despite problems with supply and recruitment. Tony McDonough reports

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Business activity carried on growing in September despite supply and staff problems

 

Business activity in the North West continued to grow in September despite supply bottlenecks and staff shortages.

According to the latest North West Business Activity Index from NatWest, where companies reported greater activity, they linked this to improved demand conditions and an associated increase in new business.

NatWest’s index is a seasonally-adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors. It stood at 54.9 in September, down from 55.3 in August. It signalled growth for the eighth straight month but at the slowest rate since February.

September data pointed to a seventh successive monthly rise in new work intakes at North West companies. Where growth was reported, panel members mentioned improved demand from domestic and international clients. However, anecdotal evidence suggested that the upturn was restricted by shortages of labour and raw materials.

Firms in the region remained strongly confident that output would increase over the course of the coming 12 months, as the recovery from the pandemic was predicted to continue.

Panellists expect to gain market shares, improve productivity, launch new products and services, and boost investment as demand conditions continue to strengthen. The overall level of confidence was down only marginally from August, thereby remaining well above its long-run average.

Private sector employment in the North West rose further at the end of the third quarter, stretching the current sequence of expansion to seven months. Despite easing from August, the pace of job creation remained marked by historical standards.

According to survey participants, additional recruitment stemmed from capacity expansion efforts, the establishment of new units and anticipation of growth in 2022. The upturn, however, was reportedly curbed by candidate shortages.

For the second month in a row, cost inflation in the region outpaced the national average.  After easing in each of the prior two months, the rate of output charge inflation accelerated in September and approached the series record set in June.

Richard Topliss, chairman of NatWest North Regional Board, said: “Business activity levels continued to recover at companies across the North West in September, but the PMI data indicated that the pace of growth softened further.

“It’s unsurprising to see growth slowing down after the initial reopening phase in the summer, but at the same time, businesses are telling us that supply bottlenecks and labour shortages are also holding back activity.”

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