North West business activity growth strengthens to seven-month high in April

The latest NatWest PMI report signalled an improved picture for the North West private sector in April.

New orders increased after a brief drop in March, while activity growth picked up to a seven-month high.

Still, firms in the region raised their prices at the softest rate in 34 months as competitive pressures heightened.

The headline NatWest North West Business Activity Index – a seasonally-adjusted index that measures the change in the combined output of the region’s manufacturing and service sectors – rose from 53.7 in March to 55.2 in April, signalling a strong increase in output at private sector firms in the North West.

It was the sharpest rate of expansion in seven months, driven by many firms reporting larger order book volumes than in March.

Some panelists continued to stockpile goods at the start of April before the delay to Brexit. However, this effect was weaker than seen during the first quarter of the year.

New business returned to expansion territory in April, registering a moderate increase in private sector sales and offsetting a brief decline in the previous month.

Many firms in the North West commented on rising demand from new and existing customers, as well as a wider range of contracts.

This was in sharp contrast with the UK as a whole, which saw incoming business decline at a slight rate.

Firms continued to clear backlogs in April. The rate of depletion was softer than in March though, due to the modest rise in new business.

As well as output increasing at an elevated pace, some firms attributed the fall in work-in-hand to system improvements leading to higher efficiency.

Meanwhile, latest data signalled another round of job creation, although the rate slowed from the previous month. Recruitment was related to both current output growth and long-term business plans.

Output charges rose only modestly in April, marking the weakest increase in selling prices for nearly three years.

Despite the latest upswing in new business, firms found that previous declines led to competitive pressure to keep charges low in order to retain customers.

Input costs continued to rise steeply though, placing further pressure on profit margins.

Services firms mostly related this to higher wages, while manufacturers noted an increase in oil and raw material prices.

Business sentiment rebounded to a six-month high in April, marking a notable improvement since March.

It came as firms stated higher growth forecasts due to larger investment returns and an improving outlook for the export market.

Richard Topliss, chair, NatWest North Regional Board, said: “North West firms saw a sharp boost to activity in April, despite fewer survey respondents mentioning stockpiling for Brexit, before the delay.

“Mostly, it was due to a rebound in new orders as clients increased demand in the wake of softening price inflation and improved confidence.

“Charges for goods and services have risen at an elevated pace over the last few years, but latest data showed the rate of inflation easing to a 34-month low.

“Hopefully, this will reignite the regional economy and drive further demand growth throughout the second quarter of 2019.”