NatWest Survey: UK Regional Business Activity Slows in July 2023, Employment Holds Steady while Inflation Trends Vary

NatWest Survey: UK Regional Business Activity Slows in July 2023, Employment Holds Steady while Inflation Trends Vary

(IN BRIEF) In July 2023, the NatWest Regional PMI® survey revealed a divergent landscape for UK regional business activity. While business growth across regions hit a six-month low due to reduced demand, employment remained relatively robust, with nine out of twelve areas reporting increased workforce numbers. Inflation rates exhibited mixed trends, as input cost inflation ticked up while output price inflation slowed in many cases. The survey highlighted varying levels of growth, with London experiencing the highest expansion rate but witnessing a notable loss of momentum. The South East and Northern Ireland returned to contraction territory, with the North East facing the sharpest overall decline in activity. Despite employment remaining positive, the slowdown in business activity and challenges in demand raised concerns about the future outlook, while inflation trends suggested increased input costs yet slower output price increases due to competition amid cooling demand.

(PRESS RELEASE) LONDON, 14-Aug-2023 — /EuropaWire/ — In July 2023, the NatWest Regional PMI® survey indicated a decline in business activity growth across UK regions, reaching a six-month low due to reduced demand. However, employment remained relatively strong, with nine out of twelve areas reporting increased workforce numbers. Inflation rates displayed a mixed pattern, as input cost inflation increased while output price inflation slowed in most cases.

The PMI Business Activity Index, which tracks changes in the output of goods and services within the private sector, revealed that only half of the monitored regions and nations demonstrated growth in business activity. London, despite having the highest expansion rate, experienced a notable drop in momentum. The South East and Northern Ireland returned to contraction territory, with the North East recording the most substantial decline in activity.

Most regions observed a decrease in new business, except for London and the West Midlands, where growth rates slowed. The strongest input cost inflation was seen in London, followed by the South West, while Northern Ireland reported the lowest rate in over three years.

Employment growth varied across regions, with the South West, East of England, and London leading, and the East Midlands and North East witnessing declines. Backlogs of work decreased across all regions, signifying reduced pressure on business capacity. Business confidence displayed a mixed trend, with some areas showing improved sentiment, while others experienced a decline.

Sebastian Burnside, NatWest Chief Economist, noted that while employment remained positive, the slowdown in business activity and challenges in demand could impact the future outlook. Burnside also highlighted the dual nature of inflation trends, with increased input costs yet slower output price increases due to competition amid cooling demand.

The full July 2023 NatWest UK Regional PMI® Report can be downloaded at https://www.natwestgroup.com/content/dam/natwestgroup_com/natwestgroup/pdf/140823-NatWest-PMI-Report.pdf

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SOURCE: NatWest