NW business activity plummets in latest lockdown

Latest North West analysis from NatWest showed a big fall in business activity in January leading to job losses as the new COVID-19 lockdown was imposed. Tony McDonough reports

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North West companies reported a fall in business activity in January, says NatWest


Firms across the North West reported plunging levels of business activity in January after the country entered a new COVID-19 lockdown.

In the latest North West Business Activity Index from NatWest, it’s revealed the combined output of the region’s manufacturing and service sectors – registered 37.1 in January, down from 51.4 in December. A reading above 50 signals growth and below 50 contraction.

It was the first time the seasonally adjusted index, that measures the month-on-month change in activity, had fallen below 50. The North West reading was below the the UK average (41.2), but it was well above the record low recorded in April last year (19.7) during the first national lockdown.

The reimposing of national lockdown measures weighed heavily on demand for goods and services across the North West private sector in January. Firms reported a sharp drop in new business that was the steepest since last May and more marked than the decrease seen across the UK as a whole.

A number of panellists also noted sales were down as a result of clients having built up stocks prior to the end of the Brexit transition period in December. However, on balance, businesses operating in the North West remained upbeat about the outlook for activity in 12 months’ time.

There were hopes that the disruption caused by COVID-19 would start to fade as vaccines are rolled out, and also that any Brexit teething problems would prove short-lived. Expectations even picked up slightly since December, though the overall degree of optimism was lower than the UK average.

Businesses in the North West resorted to further staff cutbacks in January, as they reported the need to cut costs and bring staffing capacity more into line with current demand.

As was seen across the UK as a whole, the rate of job losses accelerated from the previous month, though it was still among the weakest seen during the crisis so far. Underlying data showed that the decline in employment was centred on the service sector.

Richard Topliss, chairman of NatWest north regional board, said: “There are two ways to look at the latest results. On the one hand, January saw business activity fall sharply and the pace of job shedding reaccelerate as lockdown measures were reimposed, with the rates of decline in the North West exceeding those seen nationally.

“However, a glass half full person would note that the latest lockdown has seen a shallower contraction than was recorded last spring, that the rate of decline in employment remains slower than was seen on average last year, and that the region’s below-par results come on back of a period of outperformance in late-2020.”

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