↵

NatWest’s 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 – recorded 51.4 in August, slightly up from 51.1 in July, signalling a modest expansion in private sector output across Yorkshire and Humber.

Growth was subdued when compared to its long-run average (since 1997), but the region was one of the UK's top performers in August and surpassed only by the North West and London.

Companies across Yorkshire and Humber recorded a renewed increase in demand for their goods and services during August following July's decline. According to survey respondents, some improvements on the supply side encouraged clients to restock, although others remarked on large order placements.

While the expansion was the quickest in four months and contrasted with a fractional reduction in new orders across the UK as a whole, it was below its long-run average.

However, the region registered the strongest level of confidence across the 12 monitored parts of the UK.

Strategic growth plans, including efforts to gain market share by improving competitiveness, underpinned optimism at some respondents.

Private sector employment across Yorkshire and Humber continued to increase during August, although the rate of jobs growth slumped to an 18-month low.

The seasonally adjusted Outstanding Business Index fell further below the 50.0 no-change mark in August, signalling a faster reduction in backlogs of work across Yorkshire & Humber's private sector. The rate of depletion was the fastest since June 2020 and was attributed to lower new order intakes, enabling firms to clear incomplete work.

Private sector companies in Yorkshire and Humber recorded another steep increase in input costs, including transport, energy and raw materials, during August.

Prices charged by private sector companies in Yorkshire and Humber for the provision of goods and services continued to increase during August. According to anecdotal evidence, this was in line with greater cost burdens.

Malcolm Buchanan, chairman of NatWest North Regional Board, said: "Yorkshire & Humber recorded another subdued performance in August, despite measures of business activity and new orders edging slightly higher into expansion territory. That being said, when compared with the broader UK trends – which showed declines in both instances – Yorkshire and Humber fared relatively well and emerged as a top-performing region midway through the third quarter.

"Nevertheless, other survey indicators suggest downside momentum is likely to build in the coming months. Backlogs of work fell at the sharpest rate in over two years, reflecting growing spare capacity. As such, employment growth slumped to an 18-month low as business requirements shrank.

"If some positives were to be taken, it would be the softer rises seen for input costs and output prices. For now it seems the inflation peak has passed, but uncertainty over energy costs as we head into winter could easily challenge this."

Yorkshire & Humber activity growth remains subdued despite slight pick-up in August