Cost price rises start to slow growth in Lancashire, bank reports
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The latest Regional PMI data from NatWest showed a slowdown in the rate of business activity growth across the North West in May, reflecting a loss of momentum in the post-lockdown recovery and headwinds to demand from rising prices and economic uncertainty.
Firms reported a sharp increase in charges for goods and services as they continued to grapple with rising costs, although a rise in employment was indicative of relatively resilient business confidence in the region.
The headline North West 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 – registered 53.0 in May. Although still above the 50.0 no-change threshold, the latest reading was down from April's 58.7 and signalled the slowest growth for four months.
After falling to a four-month low in April, firms' expectations towards future activity showed a slight rebound midway through the second quarter. The improvement in confidence among businesses in the North West contrasted with a decline across the UK as a whole.
But business costs continued to intensify midway through the second quarter, with the rate of input price inflation accelerating to a new record high.
Richard Topliss, chairman of NatWest North Regional Board, said: "Growth of business activity in the North West is starting to slow, as the momentum gained from the lifting of COVID restrictions begins to fade and sharply rising prices act as a headwind to demand.