A slight pick up in business activity was witnessed in August but slowing jobs growth and excess capacity leaves a subdued sense among analysts.
NatWest’s Yorkshire and Humber Business Activity Index had fallen to its lowest level in 18 months in July, registering 51.1. The month just ended was up 0.3 per cent to 51.4.
The region came in as one of the top performers, with only London and the North West seeing more.
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Malcolm Buchanan, new chair 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 & 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."
Research work was completed ahead of the latest energy announcements in Westminster.
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.
The Future Activity Index edged slightly higher in August and remained well above the 50.0 no-change mark, signalling a stronger level of optimism among private sector companies in the region. In fact, the region registered the strongest level of confidence across the 12 monitored parts of the UK - not an unusual position.
Strategic growth plans, including efforts to gain market share by improving competitiveness, underpinned optimism at some respondents.
Prices charged by private sector companies in Yorkshire & 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. However, the extent to which output charges were lifted was the weakest in a year.
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