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 – once again recorded above the crucial 50.0 no-change mark in March, signalling back-to-back monthly expansions in private sector business activity across Yorkshire & Humber.
However, at 50.7, this was down from 52.6 in February to signal a slowdown in growth. It also compared with a reading of 52.2 for the UK as a whole, with the region ranking as one of the weakest-performing at the end of the first quarter.
The seasonally adjusted New Business Index registered only slightly above the 50.0 no-change mark once again in March, signalling a further marginal uptick in demand for Yorkshire & Humber goods and services. Nevertheless, this signalled the best improvement in order books for six months.
Compared to the other 11 monitored parts of the UK, Yorkshire & Humber firms recorded the weakest rise in new business and lagged behind the national average by a notable margin.
Private sector companies in Yorkshire & Humber were strongly optimistic towards the 12-month outlook for business activity in March. The level of confidence also improved, rising to its highest in almost a year. New product launches, increased demand and expansion plans were reasons given by companies that were upbeat on their prospects.
Private sector staffing levels across Yorkshire & Humber were broadly unchanged during the latest survey period, as evidenced by the respective seasonally adjusted index recording close to the 50.0 no-change mark.
While some companies expanded their workforce numbers to boost capacity and accommodate higher sales, others opted to not replace voluntary leavers.
Adjusted for seasonal influences, the Outstanding Business Index fell below the 50.0 no-change mark in March, signalling a decrease in backlogs of work across the Yorkshire & Humber private sector. The rate at which pending orders were cleared was marginal and slightly faster than seen across the UK as a whole in March.
Private sector companies across Yorkshire & Humber continued to observe rapid increases in their operating costs during March. According to respondents, higher expenses relating to transport were seen, although others remarked on general price increases for a variety of items and services.
That said, the rate of inflation eased to a 25-month low during March, partly reflecting a drop in the price of certain raw materials.
Following the trend seen in input costs, private sector companies across Yorkshire & Humber raised their selling charges sharply, but to the weakest extent in just over two years during March. In many cases, higher output prices reflected efforts to pass on greater cost burdens to clients.
In comparison to the other 11 monitored parts of the UK, only Northern Ireland, the West Midlands and South East saw faster increases in selling charges.
Malcolm Buchanan, chair of the NatWest North Regional Board, said: “A sustained upturn in private sector output in March is good news, rounding off a positive opening quarter of the year despite January’s decline. However, activity and new order growth across the region lagged behind that seen across the UK as a whole in March, with Yorkshire & Humber firms ranking among the bottom performers on both counts.
“Encouragingly, a strengthening of business confidence to a ten-month high suggests that companies are looking beyond March’s slowdown and are optimistic of growth in the coming year.”
