Output from the region’s manufacturing and service sectors rose for the second month in a row, according to an influential business survey.
The NatWest North East PMI Business Activity Index rose to a score of 55.8 in April, the fastest rate of growth in almost two years. Among the 12 UK regions, the North East registered the second highest increase in output, though there were signs that inflationary pressures are still taking a toll on firms in the region.
Within the survey, the Future Activity Index rose in April to the highest since October 2021, indicating a brighter outlook among North East companies, though the region still has the lowest business confidence in the UK. The survey’s Employment Index rose in April, signalling a rise in staffing levels for the first time since last May.
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Malcolm Buchanan, chair of the NatWest North Regional Board, said: “April was on the whole a good month for the North East’s private sector firms, with a notable acceleration in output growth. This was foretold by March’s improvement in new business inflows, and another strong rise in demand in April bodes well for the second quarter as a whole. Expectations for the year ahead also rose, reflected in the first increase in staffing for nearly a year.
“The main note of caution in the latest results concerned inflation. The Input Prices Index barely moved since March, remaining at an elevated level having previously trended lower since the second half of 2022.
“This is further evidence that headline inflation remains stubbornly high, at least until anticipated base effects on energy prices kick in. Wages and food reportedly drove costs up in April.”
The PMI - which is based on surveys with companies around the UK - comes ahead of an important period for the North East economy, with regional unemployment figures released tomorrow and the latest inflation rate due to be published next week.
Recent reports from organisations including the North East England Chamber of Commerce and the Entrepreneurs’ Forum have suggested that business confidence is returning in the region, though some concerns remain for businesses, especially around costs and the difficulty of hiring staff.
On Friday, official figures showed that the UK economy grew marginally over the first quarter of the year, while the Bank of England last week said it no longer predicts the UK will enter a recession this year after upgrading its economic growth projections. Last Thursday the Bank increased interest rates from 4.25% to 4.5% - the highest level since 2008.
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