Business activity growth was sustained throughout most of the UK in May, with London the clear standout performer, according to the latest Regional PMI® survey from NatWest. Elsewhere, rates of inflation in prices charged for good and services slowed, although they remained elevated by historical standards due in part to the pass-through of rising wages.
Almost all UK nations and regions monitored by the survey saw a rise in output in May, the only exception being Wales where the Business Activity Index dipped below the 50.0 no-change mark for the first time in four months, albeit marginally at 49.4. London (58.5) once again recorded by far the strongest growth rate, but one that was slightly slower than in April. In fact, only the West Midlands (54.2) saw an acceleration in the rate of expansion in business activity from the month before.
Sebastian Burnside, NatWest Chief Economist, commented:
"The latest batch of regional PMI data showed business activity rising across almost all parts of the UK in May, but it also indicated that growth has become increasingly uneven. London reaffirmed its status as the fastest-growing region, far outpacing the next-best performer which was the South East.
"Although job markets across the UK have slowed down compared to this time last year, we're still encouraged by the fact that most regions saw a rise in employment during May.
"One of the consequences of the labour market strength is second-round inflation effects. Workers are able to demand higher wages to cope with the rising cost of living, which is in turn leading companies to pass on higher operating expenses through further price increases and thereby keeping inflation higher for longer. And we're seeing this in the data.
"Despite falling fuel prices, average business costs continued to rise at rates well above their historical averages in almost all areas in May, and that's largely down to wage pressures, according to reports from businesses. It isn't surprising to see London with the highest cost inflation, given its services-dominated economy and relatively smaller exposure to the decline in manufacturing purchase prices we're seeing. Whilst coming down in most areas in May, selling price inflation is still elevated as many businesses across the UK are able to push through higher charges for goods and services."
Please see the regional reports in full:
UK National PMI Report May 2023
North East PMI Report May 2023
North West PMI Report May 2023
Yorkshire and the Humber PMI Report May 2023
East Midlands PMI Report May 2023
West Midlands PMI Report May 2023
East of England PMI Report May 2023
London PMI Report May 2023
South East PMI Report May 2023
South West PMI Report May 2023
Wales PMI Report May 2023
