North West firms return to growth

THE region’s firms are showing signs of recovery but are still shedding jobs as companies focus on cutting costs.

The Royal Bank of Scotland’s purchase managers index (PMI) found that for the first time since last August output rose from 49 on the index to 53.6 which, says the bank, indicates a solid expansion of activity. The rate of growth in the North West was faster than the UK average.

However, for the thirteenth month running private sector employment fell at a sharp rate as firms continued to cut costs.

Mark Smyth, economist at The Royal Bank of Scotland, said the May PMI survey heralds an encouraging return to growth for firms in the North West, after eight months of contraction.

He said: “The welcome signs of output growth were supported by a sixteen-month high in the level of incoming new business. However, while the return to growth is heartening, it is still too early to say whether the growth in output can be sustained over the next few months.

“The region’s economy still faces several challenges ahead, as evidenced by the further reductions in employment in May.”