February saw a "sharp and accelerated" increase in business activity across the North West, the latest Regional PMI data from NatWest has revealed.
The headline North West Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – jumped from an 11-month low of 50.8 in January to 56.7, its highest since last November.
Growth in the region was broad-based across both the manufacturing and service sector, although, overall, it was slower than the average across the UK as a whole, the bank added.
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Latest data showed a strong pick-up in demand for goods and services provided by firms in the North West in February.
Inflows of new work rose sharply and at the quickest rate since July last year, as surveyed firms commented on growing client interest and successful sales drives.
Although much faster than the historical series trend, the rate of new business growth in the North West was slower than the average across the UK as a whole in February.
Firms operating in the North West maintained a strongly positive outlook for activity over the coming year in February, NatWest added.
Expectations held close to January's four-month high and were well above the historical series average (since July 2012).
Businesses were hopeful that the pandemic's impact would wane in the months ahead, alongside an easing of supply constraints. Local manufacturers were more optimistic than their service sector counterparts.
The latest data showed a faster increase in employment across the North West private sector, as local firms stepped up efforts to expand operating capacity.
The pace of job creation accelerated for the second month running to the quickest since last October, and was faster than the UK-wide average. Underlying data showed that the increase in workforce numbers was broad-based by sector and led by services.
The combination of rising intakes of new work and constraints on business output owing to material and staff shortages led to a build of outstanding businesses across the North West private sector in February, the eleventh month in a row in which this has been the case.
NatWest said the rate of accumulation accelerated to the fastest for four months, although it remained below the highs seen in 2021.
Firms in the North West faced another sharp increase in their operating expenses in February. The rate of input price inflation ticked up since January to take it back closer to last November's all-time high.
Energy, materials, transport and wages were all cited as sources of cost pressure, anecdotal evidence provided by surveyed businesses showed.
Steep rises in input prices were recorded across both manufacturing and services, with the former continuing to record the faster rate of increase.
Many businesses across the North West sought to pass on higher costs to clients through increased output prices during February, aided by strengthening underlying demand, the bank added.
Richard Topliss, chairman of NatWest North Regional Board, said: "The North West enjoyed a much better month in terms of business activity in February, as Covid cases retreated sharply from their peak in January and Plan B restrictions were lifted.
"Local labour market conditions continued to improve, with the rate of employment growth at a four-month high and pointing to large numbers of people being placed into work.
"The jobs market is becoming increasingly tight, pushing up wages at a time when firms are also under pressure from the rising cost of energy, commodities and transportation. Rates of input cost and output price inflation remain at near-record highs, and they don't look like falling any time soon given the recent developments in energy and commodity markets.
"When surveyed [between 10-24 February], firms were strongly optimistic about the outlook, but the landscape has changed with the escalation Russia’s invasion of Ukraine, which poses heightened risks for the region's growth prospects."
