Regional business activity growth was led by London in June, as has been the case throughout the first half of the year, the latest NatWest Regional PMI® survey showed. However, more parts of the UK saw activity fall as the second quarter drew to a close. Price pressures meanwhile eased universally, albeit they remained stubbornly high in some areas. 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.
Just seven out of the 12 monitored regions and nations recorded growth in business activity in June, the lowest since January. London was once again the best performer but posted its slowest rise in output for three months (index at 56.0). Only Scotland (53.2), Northern Ireland* (52.5) and the East of England (51.8) saw growth accelerate. The steepest drop in activity was in Wales (46.7), which was joined in contraction by the North East (48.3), East Midlands (49.4) and South West (49.5). Output in Yorkshire & Humber was unchanged (50.0).
Sebastian Burnside, NatWest Chief Economist, commented:
“As we reach the halfway point in the year, it’s an appropriate time to evaluate the trends we’ve seen up to this point and those that are developing as we move into the third quarter. Growth so far this year has been led by London, which after a sluggish end to 2022 has recovered strongly and recorded sizeable rises in business activity for the past five months. The capital is beginning to show signs of a loss of momentum, however, which is a pattern we're also seeing in other areas, most notably in Wales, the North East, East Midlands and South West which have all moved into contraction territory in the past couple of months.
“Only half of the 12 monitored nations and regions saw a rise in new business in June, which, alongside a fall in business confidence in most areas points to a subdued outlook for the near term at least. There were some positive takeaways in the latest survey data, including a broad-based easing of price pressures. All areas recorded a slower rise in business costs in June, but in some cases, particularly in London and Scotland, the rates of input price inflation remained historically elevated due in large part to growing wage bills. Tight labour market conditions look likely to persist for the time being, with nearly all regions recording an increase in employment in June, which means underlying price pressures could stay higher for longer too.”
Please see the regional reports in full:
UK National
North East
North West
Yorkshire and the Humber
East Midlands
West Midlands
East of England
London
South East
South West
Wales
