Business growth slows in the North West

Business growth in the North West slowed during February, while input costs rose at the quickest rate in almost six years.

The latest Lloyds Bank Regional Purchasing Managers’ Index (PMI) for the North West fell from 58.1 in January to 53.9 in February. A reading of above 50 signifies growth in business activity, whereas below 50 signals contraction.

Although growth slowed, companies continued to take on new staff, as backlogs of work and new business levels continued to expand, albeit at a slower rate than in January.

The weak pound also put pressure on firms in February, with costs – including raw materials, utilities and wages – rising at the quickest rate in nearly six years.

Companies passed these higher input costs onto customers in the form of increased prices, which rose at the fastest rate since May 2011.

The Lloyds Bank PMI, or Purchasing Managers’ Index, is the leading economic health-check of UK regions. It is based on responses from manufacturers and services businesses about the amount of goods and services produced during February compared with a month earlier.

Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “The region’s economy continued to expand at a solid pace in February, but, although expansion was in line with the UK average, companies generally experienced a slowdown in growth.

“Input cost inflation also hit a 71-month high, which may have caused concern for some companies across the region. “With the possibility that these pressures could continue, it’s vital that companies across the North West start to plan now so that they are prepare for any future challenges.”