Confidence grows as business activity continues to rise
The recovery in business activity across the North West private sector continued in June, with the pace of growth easing only slightly from May’s record high.
The latest UK regional PMI data from NatWest showed that rebound in activity was accompanied by a record increase in average prices charged for goods and services amid soaring cost pressures.
The headline North West Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered 65 in June, down slightly from an all-time high of 66.4 in May.
Supporting growth in activity was a sustained upturn in inflows of new work, linked to the reopening of the economy and improved confidence among clients.
Businesses in the North West reported another month of sharply rising inflows of new work in June, as client demand continued to recover in line with the easing of virus containment measures. The respective seasonally adjusted index registered a series record high for the second month in a row and signalled the quickest rate of growth among the 12 monitored regions.
Underlying data indicated sharp increases in new business at both manufacturers and services firms.
Richard Topliss, chairman of NatWest North Regional Board, said: “Business activity has come roaring back during the second quarter, rising sharply again in June following May’s record growth.
“The upturn in new business has shown no sign of relenting, recording a fresh record increase as the reopening of the economy releases pent up demand for goods and services.
“This is translating into more jobs, but even so firms are having difficulty keeping up with demand, with latest data showing another record rise in backlogs.
“Widespread imbalances between supply and demand for materials, and in some cases labour, are putting considerable upward pressure on firms’ costs.
“This has in turn driven a record rise in average charges for goods and services, with more firms feeling encouraged to increase prices as demand recovers.”
The PMI figures were published as new figures from Office for National Statistics showed the UK’s economy grew more slowly than expected in May after a rebound in the hospitality sector was offset by disruptions to car production.
The economy expanded by 0.8% in May as coronavirus restrictions eased to allow pubs and restaurants to serve indoors.
While that was the fourth consecutive month of growth, it was also a slowdown from the 2% growth seen in April.
The economy is still 3.1 per cent below pre-pandemic levels, the ONS said.