Modest growth maintained in Yorkshire and Humber as…

Modest growth maintained in Yorkshire and Humber as rest of UK sees economy shrink

Modest growth in business activity for the Yorkshire and Humber region has been recorded against a backdrop of recessionary fears.

The region’s quarterly growth performance was at its weakest in over two years, however, although it contrasted with deepening contraction across the UK as a whole. The analysis in the latest NatWest Regional PMI data showed the headline Business Activity Index registering 51.4, unchanged from August and just above the 50 threshold between positive and negative.

Solid job creation was evidenced despite waning business confidence, as price pressures remain at record highs.

Malcolm Buchanan, chair of NatWest North Regional Board, said: “Yorkshire and the Humber has managed to keep its head above water and eke out further modest growth, at a time when most other areas across the UK have started to see output levels decline. It's encouraging to see some resilience in demand for goods and services produced across Yorkshire and the Humber, as well as a continued increase in regional employment. “However, persistently high inflation and increasing customer uncertainty are growing concerns among local firms, who are now the least optimistic about the outlook since the initial Covid-19 shock. The rate of cost inflation faced by businesses has eased slightly, but it remains uncomfortably high and continues to drive up prices charged for goods and services, thereby compounding cost of living pressures."

A slight increase in inflows of new business was reported at the end of the third quarter.

Malcolm Buchanan, chair of NatWest North Regional Board. (Gary Baker)

As has been the case in seven of the first nine months of the year, firms' expectations towards future growth prospects weakened in September. It meant that sentiment, although still positive and stronger than in any of the other 11 monitored regions, fell to the lowest since the pandemic began almost two-and-a-half years ago.

Anecdotal evidence showed increasing concerns about persistent high inflation and its impact on client confidence and spending power.

Greater staffing capacity allowed firms to make inroads into their order backlogs during the month. Outstanding business has now decreased in each of the past three months. The rate of depletion eased from August's 26-month record but was still quicker than that seen across the UK as a whole.

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