Business activity continues rising across North West private sector in March

The North West private sector experienced a positive end to the first quarter, the latest Regional PMI figures reveal.

Firms in the region reported a sustained upturn in business activity, while employment in the region also ticked up, albeit only marginally, as demand showed further signs of strengthening and business confidence reached the highest for over a year.

Price pressures, meanwhile, eased and were among the lowest seen across the UK.

The headline North West PMI 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 a second successive reading of 52.7 in March, signalling further moderate growth of regional output. It was broadly in line with the average for the UK as a whole (52.8).

Demand conditions continued to improve across the North West during March, as highlighted by a third straight monthly rise in inflows of new business.

The rate of growth picked up slightly to the quickest since May 2022 and was faster than the average observed for the UK as a whole. Where an increase in inflows of new work was recorded, surveyed firms remarked on improving client confidence and greater business wins in the domestic market.

Latest data showed business confidence continuing to rise across the North West private sector at the end of the first quarter. The degree of optimism reached the highest for more than a year and was the fourth strongest among the 12 regions and nations monitored by the survey, behind the West Midlands, South East and East of England.

Planned investment, new product launches and increasing marketing efforts were some of the factors expected to support highest activity over the next 12 months.

There was a slight increase in employment across the North West private sector in March, following no change in the previous month. Underlying data indicated that modest jobs growth in the service sector was sufficient to offset mild staff shedding in the manufacturing sector. The increase in regional workforce numbers, which panelists generally linked to growing business requirements, broadly matched the result for the UK as a whole.

As has been the case in every month since June 2022, companies operating in the North West recorded a decrease in outstanding business (ie new orders awaiting completion) during March.

The rate of depletion was solid and accelerated slightly from that seen in February, when it had reached the slowest for nine months. The decline in work-in-hand was again centred on the manufacturing sector, where panelists commented on the influence of still-soft demand for goods.

The rate of input price inflation faced by firms in the North West ticked down slightly in March, after having reached a seven-month high in February. It remained just above the series long-run average but was the second lowest among the 12 monitored regions and nations. According to anecdotal evidence, higher wages and supplier price hikes were the main drivers of the increase in operating expenses.

Higher input costs once again led businesses in the North West to raise their average prices charged for goods and services.

The rate at which output prices rose remained broadly in line with the series average, despite it having eased slightly from the previous month. That said, of the monitored regions and nations, only Scotland recorded a slower rise in prices charged.

Malcolm Buchanan, chair of NatWest North Regional Board, said: “The North West private sector has enjoyed a promising start to the year, with business activity rising throughout the opening quarter.

“Demand has started to turn around in recent months after having been on the decline during most of last year, and this is feeding through to improved business confidence.

“Firms are feeling increasingly optimistic about the outlook, expressing plans for new investments and greater marketing efforts, as concerns about the economy and inflation ease.”

He added: “Inflationary pressures in the North West have come down a touch and are low compared to most other nations and regions, with the rate of increase in prices charged for goods and services running broadly in line with the long run average in recent months.”