Rate of growth below UK average
BUSINESS: Activity in Yorkshire has fallen below the UK average and the pace of hiring has slowed down amid concerns over Brexit, rising costs and trade barriers.
Firms reported steady increases in output and employment, but the rate of growth was slower than the UK average.
BUSINESS ACTIVITY in Yorkshire has fallen below the UK average and the pace of hiring has slowed down amid concerns over Brexit, rising costs and trade barriers.
Yorkshire firms reported steady increases in both output and employment, but the rate of growth was the weakest since March and slower than the UK average, according to the latest NatWest PMI survey data.
To add to the gloom, cost pressures in the local economy spiked higher, with firms reporting the steepest rise in input prices for seven months.
The headline NatWest Yorkshire and Humber Business Activity Index – a seasonally adjusted index that measures month-on-month changes in the combined output of the region’s manufacturing and service sectors – dipped to 53.1 in June from 55.0 in May.
The latest reading was the joint lowest recorded in the current 23-month sequence of growth and compared with a UK-wide figure of 55.2.
Richard Topliss, chair of the NatWest North Regional Board, said: “The Yorkshire and Humber economy continues to grow, although it is slightly disappointing to find that the pace of expansion has fallen behind below the UK average, something which hasn’t happened too often in the past two years.
“Job creation also moderated slightly, but that doesn’t come as too much of a surprise given the heightened pressure on firms’ operating expenses from rising fuel bills and the weak pound.”
On the plus side, he said that demand for the region’s goods and services has strengthened, boding well for prospects heading into the second half of the year.
“Even though confidence among local firms has taken a bit of a hit of late thanks to growing concerns surrounding Brexit, rising costs and trade barriers, optimism in the region remains elevated when compared with the wider UK picture,” he added.
By sector, June saw increases in both manufacturing production and services business activity, with the former growing at the comparatively faster rate, albeit more slowly than at the beginning of the year.
Higher demand for the region’s goods and services was underscored by a rise in the level of incoming new orders.
The rate of growth in new business was solid and picked up slightly from a five-month low in May, although it failed to keep pace with the average seen across the UK as a whole.
Businesses in Yorkshire and Humber continued to create jobs during June, thereby extending the current sequence of employment growth in the region to 22 months. However, having eased since May, the pace of hiring was relatively subdued and much slower than that seen on average in 2017.
Data suggested that capacity among businesses was broadly sufficient to cope with the current level of demand, with firms reporting falling backlogs of work for a second straight month in June.
NatWest said that Yorkshire businesses came under pressure from rising costs in June.
The rate of input price inflation jumped sharply from the month before to the highest since November last year.
The surveyed businesses reported increases in the prices of raw materials and fuel, and also commented on salary pressures and the effects of the weak pound.
Prices charged for goods and services were raised as a result, although the rate of increase in June was the least marked for four months.
Business confidence towards the year ahead outlook for activity was at a 22-month low in June.
That said, Yorkshire firms are still optimistic about future activity, and more so than in any other region of the UK apart from the East Midlands.