New work slowdown is UK’s fastest
THE amount of new work being secured by North East firms is falling at the fastest rate of any other region, new research suggests.
A survey of manufacturing and services businesses shows December was the eighth consecutive month in which the volume of contracts and projects secured by firms slowed down as they pointed to squeezed budgets among their customers..
The NatWest North East PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – shows the pace of decline was the fastest in three months – and above that in the 12 regions and nations monitored as part of the index.
The trend has caused concern that more job cuts could be in the works for companies looking to adjust to lack of orders. Last month saw firms scale back their workforces for the sixth month in a row, in some cases linking the moves to difficulties in replacing leavers and others taking steps to protect cashflow. The result has been North East firms completing backlogs at the fastest rate in three months, as teams are put to work on outstanding orders. And again, the region was at the top of the tables for clearing existing work.
Overall the average output of the region’s manufacturing and service firms slipped from 44.9 in November to 44.5, extending the decline seven consecutive months.
The slowdown was the fastest of all regions and nations. But despite the gloomy reports, business leaders were more optimistic about potential growth in 2024 with expectations of a market recovery, expansions and new projects. That optimism, while below the UK average, was at its highest in five months.
Meanwhile, average selling prices for goods and services from North East companies rose during December in a move said to be driven by recent cost rises.
Malcolm Buchanan, chair of the NatWest North Regional Board, said: “As 2023 drew to a close, North East firms signalled yet another month of onerous operating conditions.
“Steep contractions in both business activity and demand not only continued, but deepened, while inflationary pressures eased again.
“Although the rate of job cuts slowed in December, if new business inflows continue to fall and backlogs are depleted at the current rapid pace, firms may be forced to resort to harsher capacity reductions in the coming months.”