Robust job creation has underpinned quicker expansion and output across Yorkshire and the Humber, helping the region rebound after a spring slump.
Activity increased from May’s 15-month low of 52.1 ro 54.2 as the second quarter closed, according to NatWest PMI’s Business Activity Index.
According to survey members, hiring and restocking efforts supported the latest increase in business activity. Moreover, the output was the fourth-best across the UK’s regions - and above the national average.
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The seasonally adjusted barometer of the manufacturing and services sector saw new work intake rise fractionally, with a near-record upturn in prices as inflationary pressures are passed on.
It was the fourth month running orders had softened, with the joint weakest in the current 17-month sequence of expansion.
Where new business rose, survey participants reported greater market shares and stronger demand for some goods and services. Anecdotal evidence indicated that price pressures and subdued consumer confidence restricted the upturn.
Richard Topliss, chair of NatWest’s North regional board, said: “The Yorkshire and Humber economy managed to keep its head above water in June, posting a recovery in output growth as firms sought to work through their pending workloads and rebuild their inventories - supported by robust hiring activity.
“When it comes to the demand side, the picture was more concerning as another steep rise in selling prices almost brought growth to a halt. There was only a fractional upturn in new business, the weakest since February 2021, as consumers reassessed their spending budgets due to the cost-of-living crisis. There were softer increases in both input costs and output charges, but these were nevertheless among the strongest in their respective series histories.”
Amid reports of capacity expansion efforts, forecasts of better demand conditions and the replacement of lost staff, the overall rate of job creation was sharp and quickened from May. Around twice as many companies reported higher payroll numbers (23 per cent) as those that signalled a reduction (12 per cent). The local trend for employment was the second-best of all 12 UK regions, behind only London.
Input costs increased at a softer, but still severe rate, at the third-fastest since the series started in early-1997 after recent months saw records broken. It led to another substantial increase in prices charged for goods and services across the region. The overall rate of inflation moderated to a four-month low, but remained higher than any seen prior to this.
Although private sector companies in Yorkshire and the Humber continued to report higher volumes of outstanding business in June, the rate of accumulation eased to the slowest in the current 16-month sequence. Some panellists indicated that staff and material shortages underpinned the rise in backlogs, but others suggested that subdued demand conditions enabled them to clear pending workloads.
Regional firms remained optimistic that output would increase over the course of the coming 12 months, with around 62 per cent of panellists forecasting expansion and 13 per cent predicting a contraction. However, the overall level of sentiment fell to its lowest mark in 16 months, as some companies were concerned that inflationary pressures would restrict market demand and trigger a recession.
