• Nine out of 12 regions recorded reduced inflows of new business in July
• London maintained its recent outperformance
• Business costs and output prices rose sharply, but rates of inflation slowed

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. 

Eight of the 12 monitored UK regions recorded higher business activity in July, the lowest number since February 2021 (four). London (index at 58.0) saw by far the strongest expansion, but even here the rate of expansion slowed, as was the case in six other areas. These included the West Midlands (50.3) and Scotland (50.2), where growth came close to stalling. Northern Ireland* (41.9) remained at the bottom of the rankings, while lower output was also seen in the North East (45.3), East of England (46.8) and East Midlands (48.7).

* PMI survey coverage in Northern Ireland includes construction and retail, as well as manufacturing and services.

Sebastian Burnside, NatWest Chief Economist, commented: “The effects of high inflation and heightened levels of uncertainty are starting to be seen across more and more parts of the UK, with three quarters of regions recording lower inflows of new business in July as the cost-of-living crisis continues to weigh on demand for goods and services. 

“Growth is being constrained as a result, with the number of regions reporting higher activity (nine) falling to its lowest since February 2021 (four). Moreover, even in areas where output rose during the month, growth generally slowed and was, in some cases, reliant on backlogs of work built up earlier in the year.

“Of the 12 UK regions covered by the PMI surveys, London was the best performer heading into the second half of the year, recording the strongest growth in activity and ranking behind only the South East for job creation.   

“Business confidence has taken a hit since Russia’s invasion in Ukraine and the ensuing surge in energy and commodity prices, and although there was an improvement in some areas in July, growth expectations generally remained subdued by historical standards.

“Businesses have started to slow the rate at which they increase prices charged for goods and services as demand weakens. Even so, inflationary pressures remain uncomfortably high across the UK.”

Please see the regional reports in full:

• UK National (PDF, 251KB)
• North East (PDF, 431KB)
• North West (PDF, 365KB)
• Yorkshire and the Humber (PDF, 382KB)
• East Midlands (PDF, 406KB)
• West Midlands (PDF, 379KB)
• East of England (PDF, 387KB)
• London (PDF, 357KB)
• South East (PDF, 391KB)
• South West (PDF, 386KB)
• Scotland (PDF, 369KB)
• Wales (PDF, 378KB)