The NatWest Regional Growth Tracker showed a turnaround in the fortunes of the Yorkshire & Humber private sector, as business activity rose at the strongest pace since April 2023. After decreasing in June and placing at the bottom of the regional rankings for output across the UK, local activity levels rose for just the third month in the year-to-date.
The headline 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 – increased by four points from 47.7 in June to 51.7 in July, a 15-month high and signalling a modest expansion in private sector business activity.
Malcolm Buchanan, Chair of the NatWest North Regional Board, said: “After a difficult start to 2024, which saw Yorkshire & Humber consistently rank as one of the weakest-performing parts of the UK, our regional tracker for July finally brought with it a slew of positive trends.
“Not only did business activity rise at its quickest pace in over a year, but demand for Yorkshire & Humber goods and services also expanded at a strong pace and business confidence surged to its highest level in over two years. Local employment benefited from the region’s economic upturn, with the rate of job creation accelerating.
“The hope will be that this new-found momentum can carry on through the second half of the year, although the resurgence of stronger price pressures is something to monitor closely, as this could scupper the recovery.”
Performance in relation to UK
Yorkshire & Humber businesses reported a strong influx of new work at the start of the third quarter, with new order growth aligned with the UK average after a sustained period of underperformance by the region.
The seasonally adjusted New Business Index rose sharply above the 50.0 no-change mark, signalling a rejuvenation of demand for local goods and services. In fact, the expansion in sales was the most marked since March 2022.
There was also a sharp rebound in business confidence, as signalled by the Future Activity Index rising by over 12 points from June’s 20-month low to its highest level in just over two years. Company investment plans, confidence in the economy, new product launches and forecasts of strengthening sales performances underpinned optimism, anecdotal evidence revealed.
July survey data signalled further gains for the local labour market, as net private sector employment increased for a third month in a row.
The rate of job creation across Yorkshire & Humber accelerated slightly to the quickest since June 2023 and was well above the survey average. Where workforce numbers grew, this was linked to stronger demand, the filling of vacancies and efforts to raise output potential.
Backlogs of work decreased in July, suggesting efficiency gains and adequate operating capacities to process workloads in a timely fashion. The decrease was only mild, however, and the slowest seen in 16 months.
Sharp cost pressures persisted for Yorkshire & Humber companies in July, with prices charged subsequently rising further as firms endeavoured to protect margins.
The seasonally adjusted Input Prices Index remained well above the 50.0 no-change mark in July, signalling a further steep rise in operating costs. The rate of increase signalled by the data was the strongest for three months. Higher shipping costs and wage pressures were cited by panellists.
Prices charged for Yorkshire & Humber goods and services subsequently rose as firms shared cost inflation with their customers. The overall extent to which selling prices were marked up was the greatest in four months, but below the UK average.
