Cost price rises start to slow growth in Lancashire, bank reports

Rising costs of materials and fuel has resulted in a slowing in growth in Lancashire and the North West according to a bank’s latest figures.
Watch more of our videos on Shots! 
and live on Freeview channel 276
Visit Shots! now

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.

Hide Ad
Hide Ad

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.

Richard Topliss of Nat WestRichard Topliss of Nat West
Richard Topliss of Nat West
Read More
Call for VAT cut on energy by Lancashire business leaders as economy weakens acc...

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.

"May saw the weakest rise in regional output for four months, with the slowdown reflecting a broader UK trend. Inflationary pressures show no signs of abating, with firms' operating expenses rising at a record rate for the second month running amid the growing cost of energy, materials, transportation and personnel, all of which is translating into higher prices for goods and services.

"At least for now, however, businesses remain upbeat about the outlook, and more so than in almost any other area, which is helping to sustain job creation across the region."

Related topics: