Growth of the UK economy in November was reportedly centered on London, according to the latest NatWest Regional PMI survey.
Inflationary pressures were also strongest in the capital, “with firms there recording the steepest rises in both input costs and average prices charged for goods and services. Employment meanwhile fell in most areas.”
The PMI Business Activity Index is reportedly “the first fact-based indicator of regional economic health published each month, tracking the monthly change in the output of goods and services across the private sector.”
A reading above 50 signals growth, and “the further above the 50 level the faster the expansion signaled.”
London continued to outperform “the rest of the UK regions in November, recording a sharp and accelerated rise in business activity (index at 56.5).”
The only other area to see growth “was the West Midlands (50.6).”
The North East (44.9) once again recorded “the steepest fall in output.”
However, like in most places, “the rate of contraction eased from the month before.”
Demand
Most areas recorded a fall in new orders in November, albeit “with rates of decline generally easing. Businesses in the East Midlands recorded the steepest drop in demand, followed by those in Wales.”
The West Midlands went against the trend and “recorded marginal growth in new business, but the main outlier was London where inflows of work rose markedly.”
Prices
Slightly more regions recorded a rise in costs pressures “than those that registered a moderation in November. London, which was one of the areas where input price inflation ticked up, remained at the top of the rankings.”
Here, the rise in operating expenses “remained faster than the historical trend.”
The opposite was true in the West Midlands, which “posted the slowest overall increase in input costs.”
As well as seeing the steepest rise in cost burdens, firms in London recorded “the most marked increase in average prices charged in November.”
The rate of output price inflation in the capital was “at a seven-month high and by far the quickest among the monitored nations and regions.”
Firms in Northern Ireland reported “the slowest rise in prices charged for the second month running.”
Sebastian Burnside, NatWest Chief Economist, commented:
“Although output across the UK as whole is broadly steady, our PMI results reveal some real divergences in economic performance across the nations and regions. Firms in London are thriving, with business activity in the capital showing robust growth as we head towards the end of the year. In most other places, output levels are suffering as a consequence of downward pressure on demand from high interest rates and general customer uncertainty. However, we can take some encouragement from the fact that rates of contraction more often than not slowed in November.”
As noted in the update:
“The labor market has undoubtedly cooled amid signs of slack in the economy, though the picture is less clear cut once we start digging deeper into regional trends. In fact, there are still pockets of job creation as businesses demonstrate a resilience to the current economic backdrop.”