Why Yorkshire business activity declined in December 2019

The result was driven by a faster contraction in new orders and led to further cuts to staff numbers.

Meanwhile, reduced inflows of new business allowed firms to alleviate backlogs of work at the sharpest rate for nearly seven-and-a-half years. Confidence towards the 12-month business outlook fell to the weakest level since September.

Input prices rose at a marked rate and firms opted to pass on some of the burden to their clients with an increase in average output charges.

Richard Topliss, chairman of the NatWest North regional board, said: “The latest PMI results painted a dissapointing picture for business activity in Yorkshire during December.

“The headline index fell to the lowest level for over ten-and-a-half years, partly driven by an acceleration in rate of new order decline.

“However, the result should be taken in the context of a UK-wide activity contraction, in which three of the other 11 monitored regions recorded sharper reductions than Yorkshire.

“Moreover, with the rate of job cutting in the region easing to the softest for three months, there are signs that the severity of downturn could be short-lived.”

The 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 – posted 47.6 in December, down from 49.7 in November. The reading signalled the fastest contraction in Yorkshire business activity for over ten-and-a-half years, with both manufacturers and service providers registering sharp declines.

A key factor behind the latest downturn in activity was a further reduction in new business at firms in Yorkshire.

The result extended the current sequence of contraction to four months. Though modest overall, the rate of decline accelerated from November to reach the joint-quickest since July 2016.

Amid weaker inflows of new business, firms were able to further alleviate backlogs of work in December. In fact, the latest reduction in outstanding business was the quickest since July 2012 and marked overall.

At the sector level, the decrease was broad-based, but faster at service providers.