Output and orders grow but fall in workforce, says survey

THE latest NatWest economic summary for the East Midlands showed output and new orders continue to grow – but only modestly.

The October East Midlands Business Activity Index also suggests a further “solid fall” in the number of people in work and deflation despite increases in cost pressures.

The seasonally adjusted index which measures month-on-month change in manufacturing and services showed a weakening of demand due to the latest Covid-19 restrictions.

It said: “The upturn in output was modest overall but the slowest since June.

“Nonetheless, the expansion markedly contrasted the substantial contraction seen during the first wave of the pandemic in April.”

It said East Midlands firms signalled a slight expansion in new orders during October, but at a slower rate than previous months.

It said: “Although some firms noted stronger client demand, other companies stated new Covid-19 restrictions and greater virus uncertainty had weighed on total sales.

“That said, the regional trend contrasted with that seen across the UK as a whole, where new business fell modestly.”

Output expectations among firms operating in the East Midlands deteriorated slightly in October, it said – a combined result of the pandemic and Brexit which, it said, was “widely expected to bring challenging business conditions over the next year”.

Workforce numbers across the East Midlands private sector fell for the ninth successive month at the start of the fourth quarter – linked to redundancies and companies deciding not to replace people leaving voluntarily, amid weaker demand conditions and efforts to cut costs.

John Maude, a member of the NatWest Midlands & East Regional Board, said: “Business activity growth across the East Midlands dwindled in October, amid reimposed Covid-19 related restrictions and resulting weaker demand conditions.

“Efforts to cut back on costs meant firms continued to make job cuts as spare capacity was evident.

“Despite a further and faster increase in cost burdens, selling prices fell again. Companies stated that lower charges were used to entice customers in an effort to boost sales.

“Weaker sales growth also weighed on expectations, as Covid-19 and Brexit uncertainty led to a dip in business confidence across the region.”