Private sector’s shrink continues

THE North West private sector continued to contract during December – despite job creation picking up again across the region.

The latest PMI report from Natwest and IHS Markit for the region has shown continued falling output, with the bank saying it was often linked by local firms to subdued demand, election disruptions and market uncertainty.

The study, compiled from responses to questionnaires sent to North West firms, said new work intakes also decreased further.

The fall was the eighth in successive months, albeit the slowest since last July.

According to panel members, lower sales stemmed from weak underlying demand and lingering uncertainty.

Despite the bad news, rates of reduction moderated, and employment was lifted for the first time in four months as companies sought to expand capacity and prepare for the launch of new products.

At the same time, rates of both input cost and output charge inflation accelerated.

Richard Topliss, chair of NatWest’s North Regional Board, said: “Although the North West economy remained stuck in contraction at the end of 2019, some comfort can be taken from the slowdown in rates of reduction for local sales and output.

“Furthermore, renewed jobs growth and sustained optimism towards the year-ahead outlook for business activity bode well for a recovery in the near term.

“With Brexit uncertainty having restricted sales in recent months, we expect the UK’s new political scenery to provide a boost to the economic performance of the North West during 2020.”

The contraction came despite a rise in the Natwest North West Business Activity Index from 47.4 in November to 48.7 in December. The index measures the change in the combined output of the region’s manufacturing and service sectors.

According to Natwest, December data highlighted a 14th consecutive decline in outstanding business at private sector companies in the region.

Firms that reported lower backlogs commented on spare capacity arising from sluggish sales. Although marked, the overall rate of contraction eased from November.

Private sector jobs in the North West increased in December, ending a three-month sequence of contraction.