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 – signalled an intensified slump in the local economy at the end of the first quarter.
Falling to 46.9 in March, from 48.3 in February, the headline index signalled a second straight monthly decrease in business activity across Yorkshire & Humber, and one that was the quickest since October last year.
Notably, Yorkshire & Humber was the worst-performing part of the UK, both in terms of business activity and new orders during March. In fact, the region was the only monitored UK area where output levels shrank at the end of the first quarter.
The amount of new business secured by private sector companies in Yorkshire & Humber continued to decrease in March, in line with the trend since May last year. The rate of decline also gathered pace and was the quickest in four months. Weak market conditions were commonly noted as a reason for fewer sales.
The contraction seen locally contrasted markedly with expansion for the UK as a whole. Of the 12 monitored UK areas, Yorkshire & Humber registered the steepest slump in new orders during March.
With new business intakes continuing to fall, private sector companies across Yorkshire & Humber cleared more outstanding orders. Overall, this marked the thirteenth consecutive month of backlog depletion. Furthermore, the decrease was the strongest in four months and the fastest of all 12 monitored parts of the UK.
March survey data signalled a strong level of optimism towards Yorkshire & Humber business activity for the next 12 months. According to respondents, new client wins, investment and expectations of a pick-up in the UK economy supported confidence.
The growth outlook across the region was stronger than seen for the UK overall.
The seasonally adjusted Employment Index remained in sub-50.0 contraction territory during March, signalling back-to-back months of job cutting across Yorkshire & Humber. Redundancies and the non-replacement of voluntary leavers were linked to headcount reductions.
Although the decrease in staffing numbers was marginal, Yorkshire & Humber was one of just five parts of the UK to record job losses in March.
Although the seasonally adjusted Input Prices Index for Yorkshire & Humber fell to a five-month low in March, it remained well in excess of both the 50.0 no-change mark and its long-term average, signalling a further steep monthly rise in firms’ operating expenses. According to panel members, supplier fees and salaries were sources of inflation.
In response to persistent cost pressures, private sector companies in Yorkshire & Humber charged higher prices for their goods and services at the end of the first quarter.
The local rate of output price inflation was strong overall but eased slightly since February and was below that seen for the UK as a whole.
Malcolm Buchanan, Chair of the NatWest North Regional Board, said: “The latest survey data mark a particularly grim end to the first quarter of 2024 for the Yorkshire & Humber economy, being the only part of the UK where business activity shrank in March. Order books and employment are key reasons for this, with both declining once again.
“That said, despite a disappointing month, this has not served to knock business confidence, which remains at a strong level. This should provide some assurance that these weak figures are temporary, and activity and demand indicators should hopefully pick up as we move towards the summer.”
