NW economy continues to contract

PRIVATE sector companies reported another sharp contraction in business activity in January, while employment fell for the ninth month running, according to the latest data from the Royal Bank of Scotland’s Purchasing Managers’ Index North West report.

Companies cited thinner order books and fewer sales – particularly from the US and East Asia – as the main reasons for the latest retrenchment.

The decline was faster than the UK average, with the seasonally adjusted Business Activity Index* showing a level of 35.9 compared to 40.6 for the UK.

And for the first time since July 2003, falling output prices were recorded in region, with companies reporting that a weak business environment was eroding their pricing power.

Philip McKinnon, economist at The Royal Bank of Scotland, said: “The North West private sector economy continued to shrink rapidly in January. The outlook for jobs in the region was bleak as employment fell at the fastest pace since the series began in 1997.

“The final three months of 2008 saw a precipitous decline in economic activity. Small comfort can be drawn from the fact that falls in output and new orders now appear to have stabilised.”