Business activity in the North East has bounced back in February but job numbers in private firms continued to fall, a leading survey has found.
The latest NatWest North East Business Activity Index - which tracks month-on-month changes in the region’s manufacturing and service sectors - rose from 39.8 in January to 49.9 in February.
That put the North East just below the level at which growth starts, but it was ahead of the national average as higher demand for some products manufactured in the region helped push up the index.
Optimism among business leaders rose to its highest level since last July and more than 50% of firms forcast growth in the coming months compared to only 15% which predicted contraction.
But the degree of business optimism in the North East was the second-lowest of all English regions, and employment levels among North East firms fell further in the latest survey period. The decline marked 32 months in a row that falling job numbers have been reported.
Richard Topliss, chairman of the NatWest North regional board, said: “North East private sector activity showed greater stability after the decline seen in January, stabilising in February as contractions due to national restrictions to reduce the spread of Covid-19 infections were offset by growth at some firms.
“Businesses went on to record a significantly softer fall in aggregate new business, the softest in the current four-month sequence of reduction, and a slowdown in job shedding.
"At the same time, a sharp rise in input prices in the latest survey period was partially passed through to customers, resulting in a further increase in output prices. In both cases, rates of inflation were the strongest since August 2008.
“Over the medium term, firms were more confident towards growth prospects, with the level of optimism strengthening to its highest since July 2020.”
The survey found that new orders remained subdued, and many North East businesses were completing outstanding work. It also noted a substantial rise in average input prices, with the increase in costs facing businesses in the North East rising at the fatest rate in more than a decade.
The increase in cost burdens in the North East was also the second-fastest of all monitored UK regions, behind Northern Ireland.
