Business activity in the North West continued to rise further in July – but the pace of recovery slowed, new data has revealed.
NatWest’s latest North West PMI has shown sustained recoveries in both output and employment across the region last month, with the rate of growth easing as firms come under pressure from sharply rising costs.
Released on Monday, the index monitors the monthly change in the output of goods and services across the private sector, with any reading above 50 showing the economy is growing.
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At 59.9, the headline North West Business Activity Index remained “firmly inside growth territory” – however was a drop on June’s 65.0 figure and also below May’s all-time high of 66.4,
Richard Topliss, chairman of NatWest North Regional Board, said: “The health of the North West private sector continued to improve in July, albeit with the latest data pointing to a general slowdown in growth compared to the situation in the previous couple of months.
“This isn’t entirely surprising, however; as we get closer to pre-pandemic levels of output, the pace of recovery is naturally going to slow. But in some cases, activity is being held back by supply constraints.
“We continue to see the broad effects of this in sharply rising input costs, which in turn poses some risk to future demand as companies pass on higher costs through price increases of their own.
“However, with almost all restrictions now lifted, firms remain strongly optimistic about the outlook and we’re seeing this reflected in a sustain rebound in local employment.”
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Included in the data were consistent trends at the broad sector level, with both manufacturers and services firms recording softer growth.
Inflows of new business at firms in the North West rose at a slower rate in July, NatWest said. Though still indicative of a historically strong pace of growth, the respective seasonally adjusted index ticked down from June’s record high to its lowest since March.
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However, despite more moderate expansions in new orders at both local manufacturers and services firms, the region continued to outperform the UK as a whole.
According to the report, businesses operating in the North West remained “highly optimistic” about the year-ahead outlook in July, citing hopes for a sustained post-pandemic recovery in demand as well as plans for future investment and new products.
Expectations did, however, retreat further from May’s series peak to the lowest for five months.
The rebound in private sector employment across the North West extended into July, marking a fifth straight month of workforce growth.