Record selling price inflation mars strong rebound by North West businesses | TheBusinessDesk.com – The Business Desk

North West firms enjoyed a sustained rebound in activity in March, with growth helping to support further job creation across the region.

However, the latest Regional PMI data from NatWest showed further evidence of rising price pressures, as local businesses reported a record increase in average charges for goods and services.

The headline North West Business Activity Index a seasonally adjusted index that measures the month-on-month change in the combined output of the regions manufacturing and service sectors registered 56.9 in March.

Up from 56.7 in February, the latest reading was well above the 50.0 threshold that separates expansion from contraction and the highest since last November. It signalled a slower rate of growth than seen across the UK as a whole (60.9), however.

The first quarter ended with a further strong rise in inflows of new business at firms in the North West, with the rate of growth holding close to Februarys seven month high and continuing to far exceed the long run average since 1997.

The upturn in new work was centred on the service sector, where there were reports of pent-up demand being released with the easing of pandemic-related restrictions. Manufacturing order books grew only modestly by comparison.

Firms in the North West remained optimistic towards the year ahead outlook for activity in March. Expectations slipped slightly for the second month running, although they remained firmly above the historical series average (since July 2012) and were the fourth highest among the 12 monitored regions.

A number of surveyed firms reported hopes of a post-pandemic upturn in activity. That said, some stated that Russias invasion of Ukraine had clouded the outlook, making it more difficult to predict.

There was sustained sharp upward pressure on business costs in March. This reflected not only higher prices paid for energy, fuel and materials amid a surge in global commodity prices, but also a rise in labour expenses. Measured overall, the rate of input price inflation ticked up for the second month running and moved closer to last Novembers series record high.

Acute cost pressures led many businesses in the North West to raise their output prices in March as they sought to protect profit margins where possible.

The rate of inflation in average prices charged for goods and services accelerated notably from the previous survey and was the quickest seen since this particular series began in 1999. Goods price inflation continued to exceed that of services, albeit with the gap showing signs of narrowing.

The upturn in private sector employment across the North West observed since March last year continued up to the end of the first quarter. Furthermore, the pace of job creation quickened to the fastest for five months and outstripped the UK average.

Hiring activity generally reflected efforts to keep up with demand, anecdotal evidence showed. Workforce growth was broad based by sector and led by services.

March saw a further rise in backlogs of work at private sector firms in the North West, thereby extending the current sequence of accumulation to 12 months.

Richard Topliss, chairman of NatWest North Regional Board, said: Businesses across the North West enjoyed a sustained robust recovery in activity in March, amid signs of demand continuing to pick up after the Omicron-induced slowdown around the turn of the year.

It was also encouraging to see local firms remaining in hiring mode, despite coming under increased pressure from escalating costs, with employment levels continuing to rebound strongly.

To try to offset sky-rocketing costs, businesses raised their own prices at a rate unseen for more than 20 years, painting the picture of a broad inflationary environment. Although businesses remained confident about their growth prospects in the year ahead, geopolitical uncertainty and soaring inflation has started to dampen optimism.

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Record selling price inflation mars strong rebound by North West businesses | TheBusinessDesk.com - The Business Desk