Strongest rise in business activity since April 2023

August Regional Growth Tracker survey data from NatWest pointed to a sustained improvement in operating conditions in Yorkshire and the Humber, with growth accelerating slightly from July. Business activity increased for the second successive month midway through the third quarter. That said, the expansion was modest overall and among the weakest of the monitored UK regions and nations, ahead of only Wales and the North East. The headline Yorkshire & Humber PMI Business 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 – rose slightly from 51.7 in July to 51.9 in August to signal the strongest increase in business activity since April 2023. Malcolm Buchanan, Chair of the NatWest North Regional Board, said: "August marked another positive month for the Yorkshire & Humber private sector, which saw an increase in business activity for the second successive month. Moreover, the rate of growth picked up slightly from that seen in July and reached the strongest for 16 months, while the expansion in new business inflows also remained solid. Concurrently, growth expectations remained robust among private sector companies which buoyed firms to raise employment levels once again. Price pressures meanwhile remained strong in the latest survey period, though the latest rise in cost burdens was the softest since October 2023, and well below the average seen over the past three years." Performance in relation to UK Private sector firms in Yorkshire & Humber saw a second successive increase in new business inflows during August, with the latest increase broadly similar to that seen in the UK as a whole. Although the rate of new business growth edged down slightly from that seen in July, it was one of the sharpest recorded in the past two-and-a-half years. Surveyed firms commonly linked higher sales this to new contract wins and stronger client confidence. Firms also remained upbeat regarding the outlook for output over the coming year. The Future Activity Index posted well above the 50.0 no-change mark, signalling robust growth expectations at private sector firms during August. New product launches and strategic business decisions underpinned optimism, according to anecdotal evidence. Continuing the trend which began in May, private sector businesses in Yorkshire & Humber raised their workforce numbers during the latest survey period. The increase in employment was modest overall, and slightly softer than that seen at the broader UK level. According to survey respondents, higher employment was mostly due to the filling of existing vacancies and efforts to provide additional staff capacity in preparation for stronger demand. As has been the case for the past year-and-a-half, the seasonally adjusted Outstanding Business Index signalled a sustained reduction in the volume of work pending completion at private sector companies in Yorkshire & Humber. Furthermore, the latest data pointed to a solid decrease in backlogs of work and one that was in line with the UK average. Private sector companies recorded a further steep month-on-month increase in overall operating costs in August, which contributed to a moderate rise in charges. The rate of input price inflation softened from that seen in the previous survey month to its lowest since October 2023, though it remained robust overall. Greater material, freight and labour costs were reportedly the key factors behind the latest increase in cost burdens, according to panellists. Prices charged for the provision of goods and services continued to be raised by companies in Yorkshire & Humber, latest survey data showed. Selling prices were often lifted to offset the impact on margins from greater costs. That said, the extent to which output charges rose was moderate and the slowest for three months.