North East private sector business activity falls in December

January 15, 2020 @ 16:19 by Richard Dawson

The North East’s private sector business activity dropped at the fastest rate since 2012, according to new data for December 2019.

NatWest’s UK Regional PMI found that the region’s Business Activity Index for year-end was 44.8, the second lowest in the UK after Northern Ireland (44.2).

The PMI Business Activity Index tracks the economic health of each of the UK’s regions on a monthly basis by measuring the output of goods and services in the private sector.

An Index of 50 or over signifies growth but less than 50 means contraction.

Across the rest of the UK, conditions remained challenging with an average Index of 49.3, but 10 out of 12 regions saw improved numbers compared to November.

It was only London showing positive growth, with a modest Index of 51.6.

It is thought that the region’s decline in activity was due to a lack of new orders, which caused local firms to lower their prices, in addition to falling employment levels.

Richard Topliss, chair of the NatWest North Regional Board, said: “The health of business conditions in the North East took a turn for the worse in December, with the PMI signalling the steepest drop in the region’s output of goods and services for seven-and-a-half years.

However, Topliss also added that he didn’t expect the outlook to look bleak in the long term, adding: “Firms’ expectations for output in a year’s time have improved considerably on the back of hopes that greater economic and political clarity will help release pent-up demand.”

Sebastien Burnside, NatWest chief economist, said: “2019 was a year to forget for many regional economies.”

“Northern Ireland and the North East stood out as two of the worst-performing areas when looking at the PMI surveys across the year.”

“However, even in areas that have been hit particularly hard in 2019, there is now renewed optimism that the unwinding of economic and political uncertainty will support business activity as we move into a new decade.”

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