Early signs of easing pressure on businesses in the North East have been mixed with a continuing downturn in an influential business survey.
The latest NatWest North East PMI Business Activity Index, which measures the month-on-month change in the region’s manufacturing and service sectors – signalled a ninth successive monthly decrease in private sector output midway in February. The February score of 47.5 was a slight improvement on January’s tally but still denotes decline in the region’s economy, and the North East had the joint lowest score of any of the Ƶ’s 12 regions and nations.
The survey highlighted an eight successive drop in job numbers and a 10th consecutive decline in new business, though the pace of decline eased in both cases. Cost pressures faced by firms across the region also remained strong overall in February, linked to greater raw material prices, salary costs and shipping fees.
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Despite the pressures on businesses, companies in the North East firms remained optimistic about their growth prospects for the coming year, though optimism levels here were the lowest in the country due to worries about general economic conditions.
Malcolm Buchanan, chair of the NatWest North regional board, said: “Though it is clear that private sector firms across the North East are still facing challenging business conditions, February’s PMI results provided some comfort that the downturn is slowing. The softest drop in demand since last May led firms to reduce activity to the least extent for six months. That said, of the 12 monitored Ƶ regions and nations, the North East remained at the bottom of the rankings for output in February.
“Though North East firms’ optimism was the weakest of all 12 Ƶ areas in February, companies reported the softest rate of job cutting for eight months. At the same time, price pressures remained sharply elevated, with both cost and charge inflation creeping up in February.”
Further indicators of the health of the region’s economy will come with tomorrow’s release of official unemployment figures, while Wednesday will see the Office for National Statistics release data for January’s GDP at a national level.
