Rising costs drag on Lancashire businesses’ progress, bank report warns

Business activity across the North West rose only marginally June, in a sign that the region's recovery was close to stalling, latest Regional PMI data from NatWest showed.

Economic uncertainty and high inflation were both headwinds to demand, with the same factors also serving to dampen firms' growth expectations.

Cost pressures remained elevated, leading many firms to raise prices charged for goods and services, though the rate of output price inflation eased to a four-month low.

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 51.2 in June, down from 53.0 in May.

This was the lowest reading for five months and only just above the 50.0 threshold that separates growth from contraction.

Inflows of new business at firms in the North West barely rose in June. The rate of growth was only marginal and the weakest seen since the easing of lockdown restrictions in March 2021.

Richard Topliss, chairman of NatWest North Regional Board, said: "The latest PMI data indicated that the recovery in the North West private sector economy was petering out in June.

"Business activity rose only marginally and at the slowest rate for five months, with firms also revising down their expectations for the year ahead amid growing economic uncertainty and an unrelenting surge in prices.

"Cost pressures remain uncomfortably high for businesses, with increased prices for energy, fuel and materials being compounded by rising wage bills and a weaker pound.

"To add to matters, firms look to be having increasing difficulty passing on higher costs to customers, with the rate of output price inflation coming down quite sharply in June, although it still was elevated by historical standards."