Cuts begin to bite as growth slows

THE NORTH West’s economy continued to outperform the UK average in terms of both output and new orders during August, but growth slowed to its weakest level for almost a year, according to a new survey.

The latest Purchasing Managers’ Index by data analyst Markit showed that activity levels across the region continued to rise, albeit at a slower pace than in July. In fact, growth was at its weakest level since last October, with firms blaming public sector cuts for the slowdown.

The manufacturing sector offered the greatest contribution towards growth, although there was evidence that spare capacity is beginning to build as levels of outstanding work fell at an accelerated rate and employment levels fell for the third time in four months. The bulk of the concentration in jobs was linked to the service sector.

The survey also showed that price inflation in the region accelerated sharply to a rate which was “comfortably above” the UK average. Higher wage bills and raw materials costs were blamed for the increased costs, which were reflected by an increase in price inflation.

“The latest PMI data shows another month of business expansion but this positive news comes with a cautious tone as this latest expansion is the weakest level for 16 months,” said Steven Broomhead, chief executive of research sponsor the North West Regional Development Agency.

“The rate of improvement has been showing signs of slowing for a few months now but we need to continue to remain optimistic to keep things in the economy moving strongly in the Northwest.”