NatWest PMI survey records drop in North-west business activity for the first time since January 2021

High-street bank, NatWest, has found business activity in the North-west fell for the first time since January 2021 according to its September Purchasing Manager’s Index (PMI) survey.

The national survey found business activity fell in all UK regions barring London and the Yorkshire & Humber regions. The North-west recorded a PMI of 49.4 (figures above 50 indicate economic growth for a region), indicating a slightly slower decline in output that the nation as a whole.

Respondents to NatWest’s PMI survey indicated a fall in new inflows of work in the North-west, however confidence remains high that businesses will experience growth over the next 12 months. Outstanding business and backlogs of work also fell in the North-west, in line with falling amounts of new sales reported.

Hiring intentions and employment rates also remained strong, but did show signs of a slowdown when compared with previous surveys, with the South West and North East regions seeing workforce numbers decline.

The bank’s economist have attributed the contraction in the economies of the North-west and other UK region’s to macro-economic factors, with rising inflation and interest rates and the falling value of the pound hurting customer demand.

Sebastian Burnside, NatWest Chief Economist, commented:

“The majority of UK regions saw business activity levels fall in September, amid an increasingly challenging economic backdrop.

“The combination of a loss of purchasing power due to high inflation, rising interest rates and concerns about the economic outlook have weighed on demand for goods and services across the board.”

Remarking on the local picture painted by the September PMI, Malcolm Buchanan, chair of North Regional Board at NatWest, said:

“The North West’s economic rebound, seen since the easing of restrictions in the wake of the third national lockdown at the start of 2021, fizzled out in September.

“The third quarter ended with falls in both business activity and inflows of new work, amid reports of growing caution among customers and a squeeze on purchasing power from sharply rising prices.

“With concerns around the trajectory of interest rates adding to the gloomy outlook, business expectations fell to the lowest since the initial Covid-19 shock.

“The labour market continued to provide a bright spot, but even here there are signs of a slowdown as employment growth slipped to a 19-month low.

“Although the PMI data showed price pressures moderating slightly in September, they remain uncomfortably high and indicate the cost of living crisis still has a lot further to run.”