Business growth in the North East has slowed to a ‘marginal’ rate as supply chain problems and cost issues hold back the recovery, an influential new survey claims.
The NatWest North East Business Activity Index, which measures month-on-month change in the region’s manufacturing and service sectors — dipped from a score of 51.7 in August to 51.0 in September.
That score still signals growth, but is the lowest level for seven months and the rise in business activity was the second weakest of the 12 monitored 海角视频 regions. Only Northern Ireland, which saw contraction last month, had a lower score.
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Businesses in the North East also saw a stagnation in employment levels in the latest survey period. Levels of job creation were considerably below the national average while firms pointed to rising cost burdens and reported one of the highest rises in inflation since the survey began in 2001.
There was still strong optimism for the year ahead in the region, though the positive sentiment had reduced and was at its lowest levels for almost a year.
Richard Topliss, chairman of NatWest North regional board, said: “Private sector firms in the North East reported a fourth consecutive slowdown in business activity growth in September, as supply chain disruption continued to bite the local economy.
“Both activity and new orders saw the softest upturns since February, with the rates of increase only marginal overall. As raw material and labour shortages intensified across the private sector, North East-based businesses noted additional strain on average cost burdens. As a result, prices charged for goods and services rose, and at one of the highest rates in the survey history.
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“These increased headwinds dampened business optimism regarding the year-ahead outlook for activity. While marked overall, the level of positive sentiment eased to the lowest level for 11 months.”
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The NatWest survey reflects warnings in the last week from both the Institute of Directors and the British Chambers of Commerce that widely-reported supply chains issues and price rises were hitting many companies’ attempts to recover from the coronavirus pandemic.
Last week also saw the North East LEP’s annual review of the regional economy warn that the pandemic and Brexit had had a ‘profound impact’ on the region’s businesses that would take some years to recover from.
All eyes will now be on this week’s unemployment figures to see if recent drops in joblessness continue in the North East.