Latest PMI data from NatWest and IHS Markit shows business activity and employment falling at the fastest rate on record during the lockdown in April. Tony McDonough reports
There was an “unprecedented” collapse in business activity across the North West in April, according to a new study.
Due to the coronavirus epidemic and subsequent lockdown on March 23, business activity in Merseyside and across the region fell to record low levels with employment also falling at the fastest rate on record.
The latest PMI data from NatWest and IHS Markit showed the headline business activity index, a seasonally adjusted index that measures the change in the combined output of the region’s manufacturing and service sectors – registered 19.7 in April, down sharply from 40.7 in March.
This was below the previous record low recorded in December 2008, in the midst of the global financial crisis. The decline in activity in April was led by services, though manufacturing production also fell sharply.
The trends observed in the North West matched those seen across all 11 other UK regions monitored by the survey, with each seeing a record fall in business activity. The decline in the North West was the slowest nationally, however.
Business closures, heightened uncertainty, and a squeeze on export opportunities all contributed to a sharp drop in client demand for goods and services across the North West private sector during the month.
New orders fell at by far the fastest rate seen since the survey was first compiled in 1997 and firms in the North West cut staff numbers for the third month in a row in April.
And, after only relatively moderate job losses in March, the pace of job shedding accelerated to a survey record. At the same time, numerous businesses reported putting employees on furlough. Despite the reduction in staffing capacity, April saw an unprecedented drop in backlogs of work.
Average prices charged for goods and services by firms in the North West fell for the first time in over four years in April. The decline was the steepest seen since this series began in 1999, reflecting widespread discounting in the service sector in particular
Richard Topliss, chair, NatWest North Regional Board, said: “In the last month, the UK economy has seen disruption on an unprecedented scale, and the impact has been felt severely by firms all across the North West.
“A collapse in demand has resulted in a record drop in the region’s business activity, and has led local firms to shed staff at a rate that is unmatched.
“It’s hard to find the positives in such a grim set of figures, but if there’s one consolation to be had it’s that the North West did see the slowest decreases in both output and employment of all UK regions, which will perhaps stand it in good stead when activity levels do start to recover.”