- Strongest expansion in activity since May.
- Quickest rise in jobs since November 2021.
- Output charge inflation softens.
Growth in activity and demand strengthened across the North East at the end of the third quarter, according to the latest Growth Tracker data from NatWest.
Private sector companies in the North East experienced stronger demand conditions in September, which contributed to a steeper rise in output. In turn, firms responded with greater hiring activity. Cost pressures meanwhile edged slightly higher from that in August, but firms displayed stronger confidence in the outlook for activity over the coming year.
At 53.0 in September, the headline North East Growth Tracker Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – rose from 51.2 in August to indicate a solid rise in business activity. The latest increase was the strongest in four months and above the UK average.
Private sector firms in the North East raised their charges for goods and services again in September, taking the current sequence of increase to just over four years. That said, the rate of charge inflation eased to the slowest in 2024 so far, and was the softest of all UK areas.
Malcolm Buchanan, Chair of the NatWest North Regional Board, commented: “The North East region saw overall operating conditions strengthen at the end of the third quarter of 2024 as companies signalled another solid rise in business activity. The rate of expansion was the most pronounced for four months and largely fuelled by a steeper rise in new business. Positive trends here encouraged private sector firms to continue to raise employment levels during September, pushing job creation to the highest in close to three years.
“While the rate of input price inflation edged slightly up on the month, in the context of the historical data the increase was modest.”
Performance in relation to UK
For the sixth month in a row, new business placed with North East firms increased. Survey respondents often linked the rise in sales to improved demand conditions. Moreover, the rate of expansion accelerated to the second-highest in the sequence, and was among the fastest of the 12 monitored UK regions and nations.
When asked about their expectations for activity over the next 12 months, North East private sector firms noted robust optimism that strengthened from that in August. Hopes of new client wins and new product launches were key factors behind the positive outlook. Despite broad-based confidence across the monitored areas of the UK, the level of sentiment in the North East was the lowest.
The local rate of job creation was solid and the quickest seen since November 2021. Panellists mentioned that headcounts were increased in line with greater output requirements. In addition, job creation in the North East was the second-strongest across the UK, behind only Northern Ireland.
Increased output requirements placed some pressure on North East private sector firms, as the level of outstanding business broadly stabilised in September following successive declines since January 2022. The latest reading of the respective seasonally adjusted index was only fractionally below the neutral mark of 50.0. Only Northern Ireland and the South West saw backlog accumulation in September.
Latest survey data pointed to a further rise in input prices across the North East, extending the current sequence of increase to four years and four months. The rate of inflation picked up fractionally from August but was weaker than the series average. Anecdotal evidence suggested that wage cost pressures were a key driver of higher operating expenses. The rise in the North East was the second-softest of the 12 UK regions and nations, ahead only of the North West.
