NatWest business survey shows sustained increases in activity in the North West

The latest NatWest Regional PMI survey for March 2024 has shown an easing of economic pressures on North West businesses and sustained increases in business activity.

The region posted an annual Business Activity Index of 52.7 in March, in line with the UK-wide figure of 52.8, indicative of modest business growth (an index above 50 indicates growth in output). All regions of the UK posted growth, with the exception of the Yorkshire & Humber region, which saw its second consecutive monthly contraction.

Firms in the North West expressed their highest levels of optimism in the economy for more than year, and reported increases in new work inflows, and growth in new business with domestic customers. Employment levels also rose in service sector businesses, offsetting some loss in employment in manufacturing where demand customer demand remains subdued. Businesses also reported input price pressures to fall slightly in March.

Malcolm Buchanan, chair of NatWest North Regional Board, said:

“The North West private sector has enjoyed a promising start to the year, with business activity rising throughout the opening quarter. Demand has started to turn around in recent months after having been on the decline during most of last year, and this is feeding through to improved business confidence.

“Firms are feeling increasingly optimistic about the outlook, expressing plans for new investments and greater marketing efforts, as concerns about the economy and inflation ease. Inflationary pressures in the North West have come down a touch and are low compared to most other nations and regions, with the rate of increase in prices charged for goods and services running broadly in line with the long run average in recent months.”

Commenting on the national picture, Sebastian Burnside, NatWest Chief Economist, said:

“The picture for the UK economy has brightened since the end of last year, and the same goes for most regions and nations with business activity rising almost universally in March.

“London continues to lead the way in terms of business activity growth, but Northern Ireland is now close behind having gained considerable momentum so far this year. A number of other areas have returned to growth in a sign that the upturn is broadening out.”

“Encouragingly, new orders are now rising across most regions and nations, signalling that demand has turned a corner since last year, although for the most part businesses are still seeing only modest growth in sales.”

“The picture for the labour market is less clear-cut, with employment increasing in March in a little over half of the 12 monitored regions and nations. Whilst businesses generally expect activity to rise in the coming year, with confidence levels looking solid across the board, falling backlogs of work in most areas point to low pressure on business capacity, thereby giving firms more room to manoeuvre when it comes to hiring policies.”  

“Another factor is that, even after three years of steep cost increases, businesses’ input prices are still rising at a relatively fast rate due in large part to wage demands. Cost pressures did at least soften slightly almost everywhere in March, which goes some way to easing concerns over sticky inflation.”