Business activity in the North East has fallen for a sixth month in a row, with the region seeing the worst trend of all regions in the UK, an influential survey has found.
The NatWest North East PMI Business Activity Index – which measures changes in the region’s manufacturing and service sectors – recorded a sixth successive contraction in output in November, though the pace of decline slowed somewhat compared to the previous month. The score of 44.9 - where anything below 50 signals a contraction in the local economy - came amid evidence of deteriorating new orders and firms losing customers in the tough economic conditions.
Firms remained confident that orders would increase in the next year, though the level of optimism in the North East was the lowest in the UK. Rising prices were still a concern for many companies, the survey found, and firms in the North East reduced workforce numbers for a fifth consecutive month.
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Malcolm Buchanan, chair of the NatWest North regional board, said: “Companies across the North East faced another difficult month midway through the final quarter of 2023. Firms scaled back activity levels given lower intakes of new orders. With that, business sentiment towards the outlook for output in the North East slipped to an 11-month low and was the weakest of all 12 monitored UK regions and nations.
With new business down since October, companies were able to keep outstanding work to a minimum. Spare capacity signals and reports of high wage costs influenced firms’ employment decisions in November as they opted to not retain their current workforce levels. As demand continued to diminish, inflationary pressures cooled further.
“November saw input prices rise at the slowest rate in over three years. A similar trend was seen for local selling prices, with charges raised at the softest rate in 34 months reflecting attempts to stimulate demand in the region.”
In a separate report by manufacturing body Make UK and business advisory group BDO, North East manufacturers were ahead of other parts of the country in terms of forward orders and confidence. But the Q4 Manufacturing Outlook survey warned there would be only small levels of growth next year due to the “anaemic economic picture for the UK overall and weak growth in the Eurozone.”
The surveys have been released ahead of an important week for official data on the state of the North East economy. Latest figures on unemployment will be published tomorrow, followed a day later by new data on the UK’s GDP output.
