Activity in Yorkshire's private sector tumbled in May, says NatWest survey

Yorkshire’s private sector activity continued to tumble in May due to the disruption caused by the pandemic, according to a new study.

The NatWest Yorkshire & Humber Business Activity Index reveals there was a “softer but sharp” contraction in business activity last month, as new orders plunged.

The activity index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered 28.9 in May, up from a record low of 15.9 in April.

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Panellists continued to cite the coronavirus pandemic when explaining reductions in output, the survey said.

New orders placed with businesses in Yorkshire decreased markedly for the third month in a row during May.

Although the rate of decline eased from April’s record, it remained among the fastest since data collection began in January 1997.

Anecdotal evidence suggested that the ongoing coronavirus-related restrictions continued to weigh on demand.

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However, private sector firms in Yorkshire remained optimistic towards the one-year business outlook in May, which was due to expectations for a recovery once lockdown restrictions are fully lifted. At the sub-sector level, service providers were slightly more confident than their goods-producing counterparts.

Businesses in Yorkshire continued to cut their staff numbers as the lockdown hammered economic growth.

The study said: “Despite easing from April, the rate of workforce contraction was still the second-sharpest in the survey history. The latest decline was the joint-quickest across all 12 monitored UK regions in May, level with West Midlands. Sub-sector data indicated that service providers recorded a marginally quicker fall in employment than manufacturers.”

“May data pointed to another decrease in outstanding business at private sector firms in Yorkshire and the Humber, extending the current sequence of reduction to 20 months. Though sharp overall, the rate of decline eased from April and was broadly in line with the UK average. Some panel members commented that a slump in demand had seen them focus on completing existing work.”

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Richard Topliss, the chairman of the NatWest North Regional Board, commented: “National measures to stem the spread of COVID-19 continued to weigh heavily on Yorkshire and the Humber’s private sector in May, with business activity continuing to fall substantially.

“Despite some firms reopening for business, demand conditions remain subdued as uncertainty surrounding the length of this crisis goes on.

“Yorkshire and the Humber fared slightly worse than the national average in terms of activity during May.

“However, there were signs that businesses in the region have maintained better-than-average pricing power, with output charges falling at the second-slowest pace across all 12 monitored areas. Another positive came in the reading for future activity, which showed expectations recovering to a three-month high.

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“Both of these results give a glimmer of hope to the Yorkshire and Humber economy.”

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