Northern Powerhouse private sector companies ‘on growth footing in April’, says new report

The Northern Powerhouse’s private sector remained on a growth footing in April, according to a report released today (Thursday, May 23).

The latest NatWest Northern Powerhouse PMI® survey says companies enjoyed healthy business activity and improved order books last month, which contrasted with subdued conditions elsewhere in the UK.

The report, produced in a partnership between NatWest and IHS Markit, is based upon responses from manufacturers and services companies across the regions of the Northern Powerhouse.

According to the survey, Northern Powerhouse private sector output growth hit a seven-month high in April and exceeded that seen across the rest of England, Scotland, Wales and Northern Ireland.

Its headline NatWest Northern Powerhouse Business Activity Index for the manufacturing and service sectors gave a reading of 53.5 in April.

The figure was better than the 52.3 recorded in March and above the 50 mark used to separate growth from contraction, continuing a run of growth stretching back to August 2016.

The report said a robust contribution from the manufacturing sector provided key support to Northern Powerhouse output in April.

Manufacturing output expanded at one of the fastest rates seen since 2017, although some of the uplift reflected stockpiling efforts and a temporary boost to sales from Brexit contingency plans.

In March, manufacturers had reported survey-record rises in both their stocks of purchases and post-production inventories amid efforts to avoid supply chain disruption.

The report said the underlying picture for manufacturing sales picked up in April, helped by the strongest rise in new export orders since December 2018. In addition, optimism about production growth rebounded to a 13-month high, partly driven by hopes of more clarity regarding the path to Brexit.

According to the report, job creation at Northern Powerhouse firms was only modest in April and eased slightly since the previous month. The region still outperformed the UK as a whole, with companies linking staff hiring to long-term expansion plans and new product launches.

The survey also signalled a rebound in business confidence, with expectations across the region at a six-month high and above the UK-wide benchmark in April.

Richard Topliss, chairman of the NatWest North Board, said: “Automotive retail sales have slowed markedly, steel producers are facing a very tough market, some retailers are struggling as shoppers move online and tensions in global trade relations should not be overlooked, but the Northern Powerhouse economy has, by many measures, displayed a strong performance relative to other parts of the UK.

“With business confidence strong, growth in the workforce, rising manufacturing output and improving order books, the creative talent, resourcefulness and determination of Northern Powerhouse businesses has defied gloomy predictions and turned in remarkable results so far in 2019.

“However, we cannot ignore the fact that the prevailing uncertainty shows few signs of clearing in the near future.

“Its impact is hard to predict but we should take comfort from the resilience our economy continues to display.”