Covid staff absences, rising prices and material shortages resulted in the North West private sector recording its slowest growth in business activity for almost a year in January, according to new data.
The latest Regional PMI data from NatWest shows the headline North West Business Activity Index registered 50.8 in January, down from 53.1 in December.
The latest reading was only just above the 50.0 mark that separates growth from contraction and the lowest since February 2021. It was also below a 海角视频 average of 54.2.
READ MORE: Liverpool law firm creates 80 jobs after relocating city centre office
Latest data showed a sustained increase in new business at firms in the North West, thereby extending the current sequence of growth to 11 months.
However, having eased for the third month in a row, the rate of increase was the slowest in the current sequence and well below the national average.
Underlying data pointed to modest increases in demand across the region's manufacturing and service sectors.
January saw an improvement in business confidence across the North West. After having eased to a 12-month low in the previous survey period, firms' expectations towards growth prospects in the year ahead rebounded to the highest since last September.
Most Read
Firms were hopeful of an end to the pandemic and an easing of supply constraints, while many also noted plans for increased investment, NatWest added.
Despite the slower increases in both activity and new business, the pace of job creation across the North West private sector continued to run at a robust clip.
Employment growth in the region even ticked up for the first time in three months and outstripped the national rate, the bank said.
Manufacturers and service providers reported taking on new staff to cope with higher demand and as part of planned expansions, with the two sectors seeing similarly strong rates of job creation.
As has been the case in each the past ten months, firms in the North West reported an increase in the amount of outstanding business (i.e. orders received but not yet completed) in January.
A number of companies reported difficulty keeping up with demand due to shortages of materials, with staff absences due to Covid also a factor.
The rate at which backlogs accumulated picked up slightly since December, though it was still the second-slowest in the current sequence of growth stretching back to last April.
Don’t miss
Firms in the North West once again faced a sharp increase in average costs in January.
Although the rate of inflation retreated slightly further from November's record high, it remained among the fastest in over 25 years of data collection. Energy, materials, transportation and wages were all sources of cost inflation, according to surveyed businesses.
Local manufacturers continued to record stronger rises in input prices than their services counterparts, although the respective rates of increase converged somewhat.
Businesses in the North West reported a further steep increase in average prices charged for goods and services in January, as they looked to pass on part of the burden of higher costs to customers.
The rate of inflation ticked down to a five-month low, though it was still faster than any time in the series history prior to last May and quicker than the 海角视频 average.
Richard Topliss, chairman of NatWest North Regional Board, said: "Growth of the North West's economy slowed at the turn of the year, as the region's businesses faced multiple headwinds from material shortages, rising prices and the impact of the Omicron variant, not least on staff availability.
"Inflation remained a prominent feature of the survey, with historically high cost pressures leading many companies to raise prices charged for goods and services.
"Despite all the challenges facing local businesses, it's encouraging to see that they remain optimistic about the outlook and are expecting a rebound in activity as 2022 progresses.
"This is helping to sustain a strong labour market recovery in the region, with employment growing at one of the quickest rates in the country."