Yorkshire suffers further slowdown in output growth, says survey

Many Yorkshire firms are feeling optimistic, despite economic uncertainty. Picture Chris Etchells
Many Yorkshire firms are feeling optimistic, despite economic uncertainty. Picture Chris Etchells
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Yorkshire’s private sector saw a further slowdown in output growth during July, according to the latest NatWest PMI data.

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Regional firms posted the slowest increase in business activity in the current three-year sequence of expansion, the survey said.

A spokesman added: “The rate of new business growth, however, was solid and quickened from June, while job creation accelerated to the fastest since November 2017.

“Meanwhile, the slower growth in activity coincided with weaker business confidence, which dipped to a three-month low.”

The headline NatWest Yorkshire & 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 – fell to 51.0 in July from 51.2 in June.

The latest reading signalled a modest expansion in business activity. It was the weakest rate of expansion since the current upturn began in August 2016.

July’s data compared favourably with the UK-wide figure of 50.7 and indicated the thirteenth consecutive month that Yorkshire has outperformed the UK as a whole.

Nick Stamenkovic, a senior economist at NatWest said: “Dickens didn’t dabble with economics but he could have penned some of this month’s Yorkshire and Humber NatWest regional PMI survey. It really is the best of times and the worst of times – especially when we look at the area in context.

"At initial sight, the latest report makes for a startling response. Business activity slowed in Yorkshire and Humber in July to its lowest level for three years. The last time it was this low was August 2016. But compared to other regional rivals it remains in positive territory, outperforming the rest of the UK.

"Similarly , new orders increased further in July, continuing the recent favourable trend and faring better than the UK average, and this positivity continues when we look at job creation – which strengthened in July, raising at its fastest pace since November 2017.

"Across all sectors, employment growth was widespread last month. The services industry was a clear leader here, with hiring here significantly exceeding the traditional driver of manufacturing.

"The impact of businesses preparing for a Brexit exit or agreement in March is clearly creating a hangover. The planned stockpiling has seen companies in Yorkshire and Humber continue to reduce work outstanding in the last four weeks given current capacity is more than sufficient to meet existing demand.

"Expectation and anticipation of what is yet to come appears to be affecting business confidence – which slipped to a three-month low in July but once again Yorkshire and Humber remains the most confident of any region in the UK.

"The region’s export climate index fell to its lowest level in July since June 2013, largely reflecting growing headwinds overseas particularly in Europe. Input prices pressures persist, driven by the recent weakness of the pound and increased wage costs. All of this is leading to local companies continuing to raise output prices to protect margins.

"It is a turbulent time but all in all, Yorkshire and Humber continues to perform well versus the rest of the UK on a variety of performance measures. It is a climate where it is a different tale for every city.”