Business activity in the north-west of the country is growing, driven by the region’s services sector

Private sector business activity in the north-west continued to grow at a solid pace in June.

The North West Business Activity Index – a seasonally adjusted indicator measuring the monthly change in the region’s combined manufacturing and services sector output – was 53.2 in June, according to the NatWest North West Growth Tracker.

This was only a slight decline from 53.4 in May, but still well above the 50.0 threshold separating growth from recession.

In signs of improving demand in the North West private sector, businesses in the regions recorded a sixth consecutive monthly increase in new customer inflows in June, the pace of growth being the fastest since April 2022.

Although new jobs were created in both the manufacturing and service sectors, it was the services sector that was the main driver of growth.

Businesses in the Northwest region continued to add staff in June, citing heavier workloads and forecasts of increased activity in the coming months.

After posting the biggest gain since August 2022 last month, employment grew at a more moderate pace in the final month of the quarter.

The increase in the number of employees in the service sector in the region compensated for the reduction in employment in industry.

Average prices charged for goods and services rose at a much faster pace in June. The rate of output price inflation was among the lowest in three-and-a-half years in the previous two months, but the latest data showed it had returned to a 12-month high.

Malcolm Buchanan, Chairman of NatWest North Regional Board, said: “The NatWest Growth Tracker shows another solid performance for the North West in June, with business activity once again picking up significantly thanks to growing demand for goods and services in the region.

“Businesses remain optimistic about the prospects for continued growth in activity over the coming year and are preparing for future growth by increasing hiring.”

He added: “There are signs that the rise in demand has boosted firms’ confidence in their pricing strategies, with average prices for goods and services rising at their fastest pace in a year in June.”

Growth in business activity in the North West region was stronger than the UK average (52.3), as was growth in the number of new businesses.

Companies operating in the north-west of the country remain confident of the potential for increased business activity over the next 12 months.

The degree of optimism fell from a 33-month high in May, but was still above the long-term trend level and above the national average.

Those predicting growth mentioned plans to introduce new products, intensify marketing efforts and generally expand the business.

While businesses continued to catch up on work in June, helped by a larger workforce, they did so at a slower pace. The rate of stock-outs actually fell sharply from the previous month and was the weakest since March 2023. It was in line with the UK average.

In June, business costs rose at a rate that was slightly different from the previous month and in line with the historical average.

Growth was slightly slower than in the UK as a whole. Reports from companies surveyed suggested a range of sources of cost inflation, including raw materials, IT equipment, transport and wages.

The underlying data showed that the rate of inflation in input prices in the services sector exceeded the rate of inflation in the manufacturing sector. The rate at which average charges for goods and services were rising was in line with the UK average.