North West output growth quickens to seven-month high

According to the latest NatWest PMI (purchasing managers’ index), the North West saw growth gather momentum at the end of the third quarter of the year.

Sharp and accelerated increases in output and new orders were recorded, with firms raising their staffing levels accordingly.

Meanwhile, business confidence improved for the third month running.

The headline NatWest North West Business Activity Index – a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors – rose to 55.6 in September from 54.2 in August.

The latest increase in activity was sharp and the fastest since February.

The rate of growth in the North West was the joint-strongest of all 12 UK regions covered, level with that seen in Wales.

Both monitored sectors saw output increase, with service providers recording a faster pace of growth than manufacturing firms.

Where business activity increased, panellists generally linked this to higher new orders.

New business rose at the sharpest pace in 2018 so far, with growth in the region the fastest in the UK.

The strength of the rise in new orders imparted pressure on capacity in the North West private sector.

As a result, backlogs of work increased for the third time in the past four months.

Moreover, the rate of accumulation was the joint-sharpest since the series began in November 1999, equal with that seen in February 2014.

Rising workloads and pressure on capacity encouraged companies to increase their staffing levels.

Job creation was recorded for the fifth month in a row, and quickened to an eight-month high.

The rate of input cost inflation remained elevated in September, despite easing to a four-month low. Where input prices increased, panellists linked this to higher costs for energy, fuel and raw materials.

While the pace at which input costs rose softened, the rate of output price inflation accelerated and was at a three-month high.

The increase in charges was marked, and well above the UK average.

North West companies remained strongly optimistic that output will increase over the coming year.

In fact, sentiment strengthened to a 19-month high in September.

According to respondents, panellists expect higher new orders to help drive output growth over the coming year, with some predicting improvements as a result of business investment.

Richard Topliss, chair, NatWest North regional board, said: “The North West economy went from strength to strength at the end of the third quarter, with September seeing sharper increases in both business activity and new orders.

“In fact, the rise in new work in the North West was the strongest of all UK regions.

“Rising workloads led to optimism about the future and a further round of hiring amid an increase in outstanding work not surpassed in the survey’s history.”

Nick Stamenkovic, NatWest economist, added: “Output growth gained momentum, driven by a sharp rise in new orders.

“As a result, employment growth ascended to an 18 month high and business confidence jumped as companies expanded business investment.”