Fall in manufacturing orders hits regional economy

THE region’s economy shrank at its fastest rate since March 2009 last month largely due to a decline in manufacturing.

Manufacturing firms have seen a decline in orders due to the global slowdown and stiff competition, according to the Lloyds TSB North West Purchasing Managers Index.

These conditions contributed to job losses for the fifth successive month.

The headline Lloyds TSB North West Business Activity Index – a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors – fell sharply to a 40-month low of 46.3 in July. Output has fallen in two of the past three months.

Leigh Taylor, area director for Lloyds TSB Commercial in the North West, said: “The North West economy slipped into contraction at the start of the third quarter of 2012. This mainly reflected the vulnerability of the region to a manufacturing-led slowdown of the broader global economy, which has been the major factor hitting output, new orders and employment across North West companies.

“This combination of weak demand and spare capacity is also expected to exert further pressure on the labour market in coming months. Lower input prices have provided some good news for firms, although even this may prove short-lived if demand remains subdued later in the year.”