Region’s economy returns to growth, but confidence weakens

THE North West’s private sector output returned to growth in September, following a slight contraction in August, according to a new survey.

The Lloyds TSB North West Business Activity index rose to 54 during the month, from 49.5 in the previous month. However, growth in the number of new orders slowed in September to its weakest level in 29 months and employment numbers continued their recent downward trend.

Survey respondents said that reductions in employment numbers were largely achieved  through natural wastage rather than redundancies.

The amount of unfinished work on companies’ books also decreased markedly, due largely to the slowdown in new orders, and a second poll by accountants BDO indicates that confidence levels among business leaders are now at a low point not seen since the recession.

Its Business Trends report, which predicts business confidence two quarters ahead, has fallen to its weakest level since January 2011, and its output report measuring business activity is at its lowest level since the summer of 2009.

Leigh Taylor, area director for Lloyds TSB Commercial in the North West, said: “The headline numbers were greatly improved in September, signalling a robust return to output growth for the North West private sector.
“However, the overall figure principally reflects the relatively strong performance of service providers, as manufacturers continue to struggle with weak demand.

“Data also show that clearing of work backlogs provided key support to activity levels in the latest survey period, as overall growth of new business eased to its weakest rate of the current 29-month run of increase.”

Jeff Jones, partner and head of BDO in Manchester, said: “Businesses’ hiring intentions point to more job losses ahead which, coupled with tumbling optimism and output, indicates tough times in early 2012.

“Given that the latest ONS growth figures have been revised downwards, this concern is even more acute.”