The latest NatWest Regional Growth Tracker showed improved performances across most parts of the UK in June, with business activity rising in eight out of the 12 nations and regions monitored.
The Tracker – which did a survey of businesses operating in the manufacturing and services sectors across 12 regions of the country – “showed business activity growth broaden from six nations and regions in May to eight in June, which was the most since September last year.”
The East of England recorded the “fastest rate of expansion, the quickest it has seen for more than three years, followed by the South West and London.”
Business activity was unchanged in the North West and “came close to stabilising in both the East Midlands and Yorkshire & Humber, while Northern Ireland saw a minor setback following growth in May.”
Sebastian Burnside, NatWest Chief Economist, said:
“It was a positive end to the second quarter, with most UK nations and regions back in growth territory. Even where business activity dipped in June, with the rates of decline being only modest and the performances better than seen on average over the first half of the year, those areas are still in what we dub ‘recovery’ territory.”
They added:
“The same is true for underlying demand. New business either rose or was on a more stable footing compared to earlier in the year. The labour market is the main weak spot at the moment, as the combination of wages pressures and underutilised capacity encourages firms to look for productivity gains where possible.”
They further noted:
“Encouragingly, cost inflation has come down from the highs seen in the spring, dropping even further in June across most parts of the UK. Businesses in all areas have been able to make smaller and smaller price increases of their own in last couple of months, relieving some of the pressure on demand.”
Alongside sustained growth in new business in Wales, there “were renewed upturns in the East of England, North East, South West and London in June.”
The East of England recorded the “fastest rate of expansion – its quickest for over two years.”
At the other end of the scale was Northern Ireland, which “saw a modest drop in new orders.”
Nearly all parts of the UK saw “a decrease in employment in June.”
The only exception was Northern Ireland, where “workforce numbers rose for the first time in five months, albeit only marginally.”
The steepest decline in staffing level “was recorded in Yorkshire & Humber.”
June saw the volume of “outstanding business (i.e. the volume of orders or projects awaiting completion) decrease in almost all 12 nations and regions, indicating a general lack of pressure on business capacity.”
The sharpest declines were jointly “recorded in the North West and Yorkshire & Humber.”
The only increase – albeit marginal – “was in the neighboring North East.”
Firms across all nine English regions and in Wales “recorded slower increases in input prices in June.”
The weakest overall cost inflation was “seen in the North West.”
By contrast, both Northern Ireland and Scotland “saw slightly faster increases in firms’ operating expenses, with the former recorded the steepest overall rise.”
Although average prices charged for goods and services “continued rising across the UK in June, rates of inflation eased in all areas.”
The most marked slowdown was “seen in the West Midlands, while the lowest overall rate of increase was in Yorkshire & Humber.”
As was the case for input costs, the steepest “rise in output prices was seen in Northern Ireland.”
Business expectations towards activity in the next 12 months remained positive “across the board in June, with the strongest optimism seen in the West Midlands.”
That said, in most cases confidence decreased “from the month before, most notably in the North East.”