Business activity grows sharply in July but momentum eases

Private sector companies in the manufacturing and service sectors recorded greater intakes of new business during July. According to anecdotal evidence, a further re-opening of the hospitality sector complemented already-robust underlying demand conditions.

However, the rate of increase in new business eased to the weakest since February.

According to the NatWest Yorkshire & Humber Business Activity Index, the region’s private sector firms had their capacities strained further during the latest survey period.

Staffing levels across Yorkshire & Humber increased strongly in July.

Where jobs growth was reported, companies attributed this to greater operating requirements due to strong demand conditions.

That said, the rate of increase in workforce numbers slowed to a five-month low and was below the UK-wide average.

Meanwhile, private sector companies in Yorkshire & Humber observed growing costs to run their business during July.

In fact, the extent to which operating expenses increased was the joint-fastest since data was first collected in January 1997.

Inflationary pressures were attributed to rising supplier charges and higher global commodity prices.

Of the 12 monitored UK regions, only Northern Ireland and the South West recorded faster cost inflation.

In response to elevated cost pressures, charges for goods and services in Yorkshire & Humber were raised substantially in July.

In fact, the rate of inflation was the second-fastest recorded since the series was first compiled in 1999. Panel members that hiked their fees overwhelmingly linked this to higher operating expenses. By sector, goods producers continued to record markedly stronger increases in their charges than service providers.

Richard Topliss, chairman of NatWest North Regional Board, said: “The Yorkshire & Humber PMI lost some momentum during July, but that shouldn’t take away from an otherwise strong month of data. Business activity grew at a rate well above its historical average, and businesses remained extremely optimistic towards their growth prospects over the next 12 months, supporting continued job creation across the region.”

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James Mitchinson