The headline NatWest Yorkshire & Humber PMI® 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 back above the critical 50.0 level and thereby into growth territory during February.
At 52.6, the headline measure was up from 48.6 in January to signal the first expansion in private sector business activity across Yorkshire & Humber since September last year. Overall, the increase was only moderate, but the strongest since June 2022.
Private sector firms in Yorkshire & Humber saw new business intakes rise during February. Although the expansion was only marginal, it was the first since September 2022. The securing of new contracts and customer restocking was reported by some panel members.
That said, the upturn was markedly weaker than seen for the UK overall. Compared to the other ten monitored parts of the UK that saw growth, Yorkshire & Humber was the weakest (new business across Wales declined).
Surveyed businesses across Yorkshire & Humber were optimistic of growth over the next 12 months during February. Although the level of confidence eased slightly, it was stronger than that seen for the UK as a whole.
Expected increases in orders, new product launches and market share gains were noted as reasons to be confident towards the business outlook.
The level of private sector employment across Yorkshire & Humber increased for a second month running midway through the first quarter of the year. Moreover, the rate of job creation was solid and quickened to a five-month high.
According to anecdotal evidence, company expansion plans and efforts to cater for higher workloads supported additional hiring.
The seasonally adjusted Outstanding Business Index rose above the 50.0 mark in February, signalling a renewed increase in backlogs of work at private sector firms across Yorkshire & Humber. The region saw the second-fastest rise in incomplete orders of the 12 monitored regions, after London.
Capacity pressures were intensified as a result of improved demand and a lack of staff, according to survey respondents.
Private sector businesses in Yorkshire & Humber experienced another month of rising input costs during February. Salary increases, elevated energy prices and rises in the price of certain materials put upward pressure on operating expenses, according to firms.
Overall, the rate of inflation eased to a two-year low, but was still higher than seen on average across the survey history.
Prices charged for the goods and services provided by private sector firms in Yorkshire & Humber continued to rise at a historically marked pace in February. The latest increase, albeit weaker than seen on average over the last two years, was well above the series average. Efforts to at least partially share the burden of higher costs with clients was mentioned by some panel members.
Malcolm Buchanan, chair of the NatWest North Regional Board, said: “After four successive months of contraction, private sector business activity across Yorkshire & Humber increased during February. The improvement was in line with the UK-wide trend, and the region was in fact one of the UK’s top performers in the latest survey period with only London, the South East and West Midlands recording stronger expansions.
“The renewed upturn in activity was accompanied by an improved trend in sales, which suggests underlying business conditions have certainly picked up since the end of last year. This has facilitated stronger employment growth across the region, and bodes well for near-term prospects.
“A further weakening of input price inflation will also be welcomed by firms. That said, cost pressures remain steep and companies continue to respond by marking up their charges, suggesting that sellers remain confident in their pricing power.”
