Business activity in the region stagnated in June as growth expectations slipped to a six month low on the back of weakening demand.
Analysis of the latest NatWest Yorkshire & Humber PMI Business Activity Index saw manufacturing and service sectors stall a four-month run of expansion. After a tentative start to the year, February through to May had seen soft increases, but this dampened as summer arrived.
Malcolm Buchanan, chair of the NatWest North Regional Board, said: “It was a disappointing end to the second quarter for Yorkshire & Humber as business activity stagnated, ending a four-month sequence of expansion. The region has been a laggard across the UK for the majority of 2023 and this continued in June.
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“Activity was constrained by weak demand, with confidence across the market reportedly deteriorating. Indeed, growth expectations dropped to a six-month low in June as concerns around persistently high inflation dampened the outlook. Price pressures remained steep across the region, with rising wage costs a key driver of firms’ operating expenses.
“Nevertheless, rates of input cost and output price inflation cooled and were among the weakest seen across the monitored parts of the UK.”
Activity dipped from May’s 50.6 to the no change barometer mark of 50.0.
Private sector businesses across the region raised their staffing levels in June, extending the current sequence of job creation seen since January. The rise in employment was modest and strengthened slightly since May. The replacement of leavers and efforts to fill vacancies were cited by some survey respondents.
The Outstanding Business Index fell further too, pointing to a faster decline in backlogs of work across Yorkshire and the Humber. The decrease was solid overall and the fastest in three years.
Unchanged private sector activity levels across the region compared notably with the UK-wide trend, which indicated sustained growth. London, the South East and Scotland were the strongest drivers of expansion at the end of the second quarter.
