January PMI data reveals difficult start to 2023 for North West businesses

The latest data from NatWest’s Purchasing Managers’ Index (PMI) for January 2023 has revealed a decline in activity for North West businesses.

The index fell to 47.2 in January from 50.0 in December: figures below 50 indicate a fall in output, while figures above signify growth.

The index, which is seasonally adjusted for both the manufacturing and service sectors, has now been below 50 for four of the five months, and has declined at its fastest rate in two years since coronavirus restrictions were last enforced on businesses.

The sharp contraction in January has been driven largely by a fall in manufacturing output in the North West, and with decreases in new orders across both manufacturing and services recorded.

Despite the decline in output, NatWest’s data shows that cost pressures on businesses have passed their peak, with hiring intentions rising. Businesses also reported growing confidence for their prospects moving forward.

Malcolm Buchanan, chair of NatWest North regional board, said:

“January’s PMI survey results were somewhat of a mixed bag, revealing both positive and negative developments across the North West economy at the start of the new year. Starting with the not-so-good news, we saw business activity return to contraction after briefly stabilising in December, with demand continuing to be strained by a combination of soaring prices and tightening financial conditions.

“However, whilst remaining elevated, businesses’ cost pressures continue to subside, boding well for the prospect of lower inflation in the coming months. Positively, local firms have grown in confidence about the outlook, which has, in turn, led to resilience in the labour market as firms continue to fill vacancies.”