Businesses in the North East are cutting jobs as the region's private sector economy suffered its fastest decline in more than a year during October, a new survey suggests.
Just days after official figures showed the national economy was broadly flat, data from the monthly NatWest North East PMI indicates that levels of new business in the region shrank for the sixth month in a row. The seasonally adjusted index, which measures change in the manufacturing and service sectors, showed a reading of 43.5 in October, down from 43.7 in September, which is the sharpest fall in 14-months.
It means the North East suffered the fastest fall in output of all 12 UK regions monitored. Responding firms talked of a reduction in new orders and weak demand conditions across the private sector, as well as destocking action and the loss of contracts.
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Amid higher operating costs - which increased during October but at the weakest rate in three years - and the deteriorating new business trend, the region's firms shed jobs. It was the fourth successive month of workforce cuts as businesses chose not to backfill vacancies, meaning the North East registered the fastest jobs decline of all regions in the survey.
The rate of price inflation was equal to September as higher amounts charges for goods and services factored in costs passed on to customers. Researchers said firms had used the month to clear backlogs while incoming contracts and orders remained slow. And although sharp, the pace of reduction slowed from September.
Despite the gloomy trends, business operators' confidence showed some resilience, on average remaining positive across the month. But worries over the economic climate did mean confidence is historically subdued and only Northern Ireland reported weaker optimism.
Malcolm Buchanan, chair of the NatWest North Regional Board, said: "October PMI survey data showed ongoing deteriorations in business conditions in the North East region. Demand weakness continued to hamper output and new business, with the reduction remaining sharp. Also, the local trend for business activity was the worst seen across the 12 UK regions and nations monitored by the survey. Cost inflationary pressures receded to a three-year low, but selling prices rose to the same extent as in September.
"Job cuts remained on the agenda at firms in the North East for a fourth month running, with the region noting the fastest drop across the 12 monitored regions. Further hesitancy was also signalled in companies' optimism towards the output outlook for the year ahead, with only firms in Northern Ireland less upbeat."
Some more positive news has come in a separate sentiment survey from consultancy Accenture and ratings agency S&P Global, which puts North East confidence above the overall UK reading. The two firms' Business Outlook survey showed the net balance of firms in the North East expecting activity to increase over the next 12 months stayed at +54% from June 2023. That was 17 points higher than the rest of the UK which dipped to +37%, down from +40% in June and +43% in February.
Both surveys have been released ahead of the release of official Office for National Statistics data on unemployment and inflation.
