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North East business suffers stagnant March, finds PMI study

Business output levels in the North East stagnated last month after a strong start to 2017, according to the latest Lloyds Bank PMI survey.

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 service providers about the volume of goods and services produced during March compared with a month earlier.

The latest PMI reading dropped to 50.1 in March, down from 54.9 in February, the lowest figure the region has seen in eight months. A figure above 50 signifies expansion in business activity, while a reading below signals contraction.

March also saw a drop in confidence for the first time since November 2016.

The North East findings are based on a range of questions posed to businesses across Northumberland, County Durham, Tyne and Wear and the Tees Valley.

Slowing growth rates also resulted in a drop in employment. This was in opposition to the rest of the UK, where all other regions registered rising employment levels.

Meanwhile, input costs continued to rise sharply on the back of the weak pound and salary pressures. However, the rate of inflation eased and this was reflected in slower price increases from local businesses.

Leigh Taylor, regional director for the North East at Lloyds Bank Commercial Banking, said: “The North East’s recent upturn seems to have lost its legs, and with business activity stagnating in March employers have focused less on recruitment.

“The region has fallen behind the pace of the general trend we’re seeing across the UK and cost pressures remain strong. Competitive pricing should help firms to recover some of the ground lost and secure more work in the current environment.”

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