New year brings growing confidence and economic growth

Two new reports have recorded positive signs for both the North West's private sector and the wider UK economy.

The latest UK Regional PMI data from NatWest showed an increase in business activity across the North West private sector in February, the first since August last year.

The seasonally adjusted index measures the combined output of the region’s manufacturing and service sectors. Where a score of 50.0 represents no change, February's measure was 52.3 - up from January’s 47.2. This signals the fastest growth in business activity for nine months.

However, while the underlying data showed rapid expansion in the service sectors, manufacturing output remaining in decline. 

Business confidence across the North West private sector strengthened for the fourth month running in February, taking it further from last October's low point (seen in the aftermath of the government's 'mini' budget) to the highest for a year.

NatWest reports that anecdotal evidence showed increased optimism among local firms towards the general economic outlook, alongside hopes of greater market shares and the successful launch of new products. Expectations in the North West were the second-highest nationally behind only the West Midlands.

At the same time, new figures show that UK GDP increased by 0.3 per cent in January, following a decline of 0.5 per cent in December.

In line with NatWest's data, the analysis shows that the UK services sector increased by 0.5 per cent while construction fell by 1.7 per cent and production fell by 0.3 per cent.

Jonathan Moyes, head of investment research at Wealth Club said: “The UK economy continues to beat gloomy expectations. Led by the dominant services sector, GDP growth of 0.3 per cent was stronger than the 0.1 per cent expected. This follows stronger than expected performance in 2022. 

"It may take a great deal more expectation beating data to shift the bleak expectations for the UK economy. However, a quiet, more optimistic, consensus does appear to be forming. The economic outlook is much improved, energy prices are falling sharply, China is reopening, and interest rate expectations have eased significantly."