New data indicates the North West's economy is finding a more stable footing, with a marked slowdown in the rate of decline for business activity and employment throughout October.
Key Indicators Show Gradual Improvement
The latest NatWest Growth Tracker reveals a nuanced picture for the region. The headline North West Business Activity Index, a crucial measure of combined output for goods and services, registered at 49.6 in October. While this figure remains below the pivotal 50.0 mark that signifies growth, it represents a significant improvement from September's reading of 47.6.
This places the region's performance below the UK-wide average of 52.2, but the narrowing gap suggests the local economy is moving in a more positive direction. Companies reporting a dip in activity primarily cited ongoing subdued customer demand and general market uncertainty as the main contributing factors.
Employment and Cost Pressures Ease
A key finding from the report concerns the jobs market. Workforce numbers within the North West's private sector fell only 'fractionally' in October. This represents the slowest rate of reduction since a wider, more significant decline in employment began nearly a year ago in October 2024.
This trend was mirrored across much of the United Kingdom, with only London, Northern Ireland, and the North East recording any job growth, and even then, NatWest noted that the 'rates of job creation were marginal in each case'.
On the cost front, businesses continued to face rising expenses, largely driven by wage pressures and the impact of a weaker pound. However, in a welcome development, the overall rate of inflation softened to its weakest level in a year, offering some respite.
Business Leaders Look Ahead with Growing Optimism
Perhaps the most encouraging signal from the data is a discernible uptick in business sentiment. Firms across the North West reported a slight improvement in their expectations for the year ahead, with many now forecasting growth.
Malcolm Buchanan, chair of the NatWest North Regional Board, commented on the findings. He stated, 'The North West started the fourth quarter on a more stable footing. Challenges persisted, but the latest figures were more encouraging on the whole than the month before.'
He added, 'Business expectations have crept up, with local firms generally forecasting growth in the year ahead. The latest data indicated that companies were more content to hold on to staff than in previous months. We also saw a welcome slowdown in the rate of increase in costs faced by businesses.'
This growing confidence, coupled with the slowing pace of decline in key areas, provides a hopeful outlook for the region's economic trajectory as it heads towards the end of 2025.
