NatWest warns of growing strain on North-west economy despite rise in activity in July PMI

NatWest’s July Purchasing Manager’s Index (PMI) has revealed a modest rise in activity but the high street bank has warned that uncertainty and high inflation are putting an increasing strain on the North-west economy.

North West Business Activity Index figures above 50 indicate economic growth and the monthly PMI survey showed a slight drop to o 51.1, a six-month low for the index. Despite slowing growth, respondents to NatWest’s survey reported new orders falling for the first time since February 2021, while price indicators remain elevated.

The outlook of businesses in the North-west also remains optimistic. Confidence did weaken slightly on June PMI figures, however, the region’s businesses remain among the most positive about future prospects (behind only the Yorkshire & Humber region) despite the challenging current conditions. The survey also showed a further increase in employment across the region, while the rate of price rises also began to slow.

Richard Topliss, Chairman of North Regional Board, commented:

“Growth of activity in July was only modest and largely achieved through progress on backlogs of work built up in previous months. But with those backlogs starting to fall more rapidly, there is a threat to near-term output prospects unless demand revives.

“Firms in the region are holding on to hopes that the lull in demand will be temporary and that activity will increase over the next 12 months, but that’s contingent on a number of things, not least developments in inflation. Rates of increase in firms’ costs and output prices remained steep in July, although they continued to retreat from their record highs earlier in the year due in part to the effects of weakening demand.”