North-west returned to growth in February, finds NatWest PMI survey

The North-west’s private sector returned to growth in February for the first time since August 2022, according to the latest data from NatWest’s Purchasing Managers’ Index (PMI) Survey for February 2023.

The latest figures have reversed a trend that saw the region’s output decline at its fastest rate since Covid-19 restrictions, with the index back in growth territory at 52.3 (the index gives a score between 0 and 100, with figures above 50 indicating increased business activity). The jump, from 47.2 in January, is the fastest growth recorded by NatWest’s monthly survey for nine months.

The high street bank’s analysis found that the uptick in activity was driven by growth in demand for the services sectors. The North-west also recorded continued improvement in employment and hiring intentions, as well as optimism for future growth as inflationary pressures on business appeared to be beginning to recede.

Despite overall growth for the region, the sector specific picture looked more mixed with manufacturing output continuing to decline, alongside job cuts in the sector in February 2023.

Malcolm Buchanan, chair of NatWest North regional board, commented:

“We saw a much-welcomed increase in business activity across the North West in February, which marked the first growth in the region for six months and broadly tallied with the UK-wide picture.

“The survey showed that the upturn was driven by a pick-up in demand, with businesses commenting on improved confidence amongst clients as apprehension around inflation and rising interest rates calmed somewhat.

“Indeed, businesses themselves are increasingly optimistic about the outlook, with expectations amongst North West companies improving substantially from the month before and now the second-highest nationally.

“A further easing of cost pressures from the highs in 2022 has likely helped brighten the mood among firms, but the survey tells us that selling prices are still rising much faster than normal as high costs – including growing wage demands – are passed on by businesses.”

The return to growth for the regional economy echoes economic data published last week on 10th March, revealing the UK economy had grown by 0.3% in January, after a small contraction in GDP in December 2022, with some economists now predicting the UK will narrowly avoid a technical recession (defined as two consecutive quarters of negative growth).