What powerhouse? Northern regions continue to underperform

London saw the fastest pace of economic expansion, with its purchasing managers’ index (PMI) rising strongly from 57.0 in May to 60.0 in June.

Capital Economics, the City consultancy, said London’s outperformance may partly reflect the fact that it is the region least dependent on the manufacturing sector, which is struggling due to the strong pound and weakness of demand in the euro-zone.

For the second consecutive month, all regions saw their PMIs above the 50-mark in June, which hypothetically separates expansion from contraction.

But there was still large differences between the regions, noted Capital.

London outperformed the regions which make up the Chancellor’s Northern Powerhouse.

Capital said: “Weighting together the North East, North West and Yorkshire and Humber regions by their share in nominal gross value added yields a PMI reading of 55.8.”

Meanwhile, survey compiler Markit noted that weakness in the manufacturing and oil and gas sectors pulled down overall growth in Scotland in June, with a PMI reading of 54.9 making it the worst performing region.

And with last week’s Budget highlighting that the fiscal squeeze is set to re-intensify imminently, those regions most dependent on the public sector, such as Northern Ireland, Wales and Scotland, look set to underperform, added Capital.

Yorkshire outperformed the national average in June.