North East business reaped the rewards of rising demand last month, resulting in sustained growth in the region’s economy.
The most recent Growth Tracker data from NatWest, which measures month-on-month change in the region’s manufacturing and service sectors, showed continuing growth in business activity across the North East economy in November.
Private sector companies which took part in the survey signalled a solid improvement in demand conditions, triggering growth in hiring activity. Confidence also grew, despite businesses in the region facing an acceleration in cost pressures.
The headline North East Growth Tracker Business Activity Index was 53.9 in November, down slightly from 54.8 in October but the rise in activity was solid and well above the Ƶ average. Businesses put the sustained growth down to an improved economic outlook across the North East, which in turn led to the improvement in demand.
Among the 12 monitored regions and nations, a stronger increase was only registered in the capital.
When asked about their expectations for the next 12 months, North East companies were at their most upbeat for four months, with new client wins and hopes for stronger economic conditions underpinning their positivity. The positive demand encouraged North East private sector firms to add to their staffing levels midway through the fourth quarter, reversing the slight dip recorded in October. Of the 12 monitored Ƶ areas, the North East also saw the best trend for payroll numbers.
In line with sustained new order growth, private sector companies saw the level of outstanding business increase for the second successive month in November and at the national level, the North East was one of only two monitored regions to see backlogs rise, the other being the South West.
November saw a further increase in input prices across the North East and the rate of cost inflation accelerated from October, reaching the highest since June, with firms citing higher wage costs as the key factor behind the rise.
Malcolm Buchanan, chair of the NatWest North Regional Board, said: “The North East private sector entered the penultimate month of 2024 on a strong footing, supported by favourable demand conditions which helped activity increase for the ninth consecutive month. Positive conditions also encouraged firms to raise workforce numbers in November, reversing the blip seen during the previous survey period. Evidence of pressure on capacity was also recorded for the second month running, with backlogs of work - a bellwether for activity over the coming months - rising at the strongest rate for three years.
“Cost inflation meanwhile accelerated to the strongest since June. Firms again opted to pass higher cost burdens to clients, as the rate of charge inflation matched October’s 10-month low.”
