PUBLIC sector spending cuts are feared to have contributed to a slackening in North West economic activity, suggests the latest Purchasing Managers’ Index (PMI).

Although the region continued to slightly out-perform the wider UK economy for work and output in August, the rate of expansion in the private sector, largely driven by manufacturing, slowed to a moderate pace.

The figures show that, while incoming new business grew solidly, and for the 16th month in succession, the latest rise was the mildest since last October.

Reports suggested that the slowdown in growth partly reflected public sector spending cuts.

And August data pointed to the existence of spare capacity in the North West private sector, while employment was reduced for the third time in four months.

Steven Broomhead, Northwest Development Agency chief executive, said: “The latest PMI data shows another month of business expansion, but this positive news comes with a cautious tone as this latest expansion is the weakest level for 16 months.

“The rate of improvement has been showing signs of slowing for a few months now, but we need to continue to remain optimistic to keep things in the economy moving strongly in the North West.”