- Business activity falls in nine out of 12 regions and nations in December
- Costs pressures, although still high, retreat to multi-month lows
- More regions report falling employment levels
More positively, pressure on demand from sharply rising prices eased somewhat, with the survey's measures of inflation retreating further from their recent record highs.
The PMI Business Activity Index is the first fact-based indicator of regional economic health published each month, tracking the monthly change in the output of goods and services across the private sector. A reading above 50 signals growth, and the further above the 50 level the faster the expansion signalled.
Of the 12 UK regions and nations monitored, only Wales and London recorded a rise in business activity in December (indexes at 52.0 and 50.2, respectively), while the North West (50.0) saw no change. This nevertheless represented an improvement from the broad-based decline seen in November. Northern Ireland* (41.6) meanwhile moved to the bottom of the rankings, having seen a sharp and accelerated fall in output.
* PMI survey coverage in Northern Ireland includes construction and retail, as well as manufacturing and services
Sebastian Burnside, NatWest Chief Economist, commented:
"For most regions and nations, 2022 ended disappointingly with a further decrease in business activity. It marked a stark contrast to the situation during the first two months of the year – before the onset of war in Ukraine and the escalation of the cost of living crisis – when we saw broad-based growth and business confidence was sky-high amid the waning impact of the pandemic.
"Price pressures reached new heights in 2022, with every nation and region seeing record increases in average charges for goods and services at some point during the year. Positively, underlying price pressures have begun to cool, with rates of business cost inflation slowing to multi-month lows in all areas in December.
"Even so, the pace of price increases remains well above what is considered ideal, and a tight labour market is likely to mean that some of this inflationary pressure stays in the system as workers seek higher pay to compensate for the rising cost of living. More and more cracks are starting to appear in the labour market, however, with more regions reporting a fall in employment than a rise for the first time in almost two years in December.
"After repeated knocks throughout 2022, business confidence looks to have steadied in December. However, business expectations remain historically low across the UK, given what is a challenging outlook for 2023."
Please see the regional reports in full:
UK National (PDF, 250KB)
North East (PDF, 370KB)
North West (PDF, 370KB)
Yorkshire and the Humber (PDF, 400KB)
East Midlands (PDF, 400KB)
West Midlands (PDF, 380KB)
East of England (PDF, 400KB)
London (PDF, 350KB)
South East (PDF, 400KB)
South West (PDF, 380KB)
Scotland (PDF, 370KB)
Wales (PDF, 380KB)
