The north east manufacturing sector continues to grow
May data from the NatWest PMI revealed a modest upturn in business activity across the private sector economy, suggesting a sustained recovery from the weather-related disruptions seen earlier in 2018.
Employment numbers have remained largely unchanged, with rising input costs and a lack of pressure on operating capacity the main factors holding back staff hiring.
The NatWest North East Business Activity Index – an index that measures changes in the combined output of the region’s manufacturing and service sectors – registered 51.8 in May, up from 50.4 in April and the highest reading for four months.
Sector data suggested that rising manufacturing production in the North East helped to offset subdued service sector business activity.
In contrast to the stronger trend recorded for business activity, the data showed a fall in new work received by North East companies.
Manufacturing remained a bright spot for the North East, according to the latest survey data. The upturn in order books at manufacturing firms was driven by improving business conditions in key export markets and rising global demand for capital goods.
The main positive finding from the latest survey was a rebound in North East business expectations to the highest since March 2016. Manufacturers cited new product launches and plans to boost export sales, while service providers noted hopes of improved operating efficiency and a rebound in consumer demand.
Richard Topliss, chair of NatWest’s regional board in the North East, said: “NatWest North East PMI data reveals that businesses achieved their strongest rate of output growth since the start of 2018, helped by a degree of catch-up from the weather-related disruption earlier this year. The region’s growth momentum remains slower than the UK as a whole, largely reflecting a soft patch for the service economy.
“Renewed pressure on household budgets from rising fuel and energy costs appears to have held back spending, which impacted negatively on consumer-focused businesses in the North East. Another robust contribution from the manufacturing sector was a key factor supporting growth in the region during May. Survey respondents noted that increased export sales and rising global capital spending had provided a boost to manufacturing output.
“The latest survey data indicates that North East firms are the most optimistic about the outlook for business activity since early-2016. While strong input cost pressures and soft consumer demand remain key challenges for the region, it is encouraging to see that private sector companies are planning to look through economic uncertainty and gear up for sustained business expansion in the coming months.”
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