A new survey of North East businesses shows declining activity in the region, despite some emerging signs of hope in the economy.
The NatWest North East Business Activity Index, which measures the region’s manufacturing and service sectors — fell to a score of 48.5 in December, having been at 49.8 a month earlier. The score means the region has recorded six consecutive monthly reductions in output, with the rate of decline accelerating slightly at the end of the year.
The level of new business received by companies in the North East fell for the 10th consecutive month in December, and the survey showed private sector firms in the North East shedding staff for the seventh consecutive month. But North East firms were optimistic of growth over the course of 2023, albeit levels of optimism were well below the average of recent years and the lowest seen in England.
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Malcolm Buchanan, chair of the NatWest North regional board, said: “Output in the North East may have fallen at a slightly faster rate in December than November, but the trend over the fourth quarter definitely improved compared to the third quarter. Of further encouragement, new business fell at the slowest rate in the current ten-month sequence of contracting demand.
“The other positive to take from the latest survey findings is that both price indices resumed their recent downward trends, after having ticked up in November. Input price inflation now stands at its lowest in nearly two years, although it still has some way to fall before it returns to its long-run average. The sharp drop in employment in December may help to keep a lid on pay demands and ward off a wage-price spiral.”
The NatWest figures are the latest to show a picture of hard times for North East businesses, but with small signs of conditions easing.
Last Friday the quarterly economic survey from the North East England Chamber of Commerce highlighted energy costs and inflation as the biggest concerns for local businesses, but said there were also worries for companies over staff costs, taxation, shortages of workers and interest rates. Businesses were increasing investment in plant and training plans, but UK sales and orders had both dropped significantly over the last year and the Chamber highlighted a general lack of business confidence.
Tomorrow will see the release of regional unemployment figures, with the end of last year seeing two of record lows before a rise in the December figures showed an increase in joblessness. This week will also see figures released on the latest rate of inflation.
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