Yorkshire sees slowest rise business activity for three months in January

The private sector economy in Yorkshire and the Humber saw a gradual slowdown in growth at the start of the year, according to NatWest’s PMI survey data.

Companies across the region posted slower increases in output and new orders, with both expanding at the weakest pace in three months.

The slower growth in activity coincided with weaker business confidence, which was the lowest since August 2013.

The rate of job creation, however, increased from December.

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 52.8 in January from 53.3 in December.

The latest reading was the lowest recorded in three months, but it was higher than a UK-wide figure of 50.3. At the sector level, both manufacturers and service providers recorded increases in activity, with the former recording the steeper rise.

Underpinning the increase in business activity across the Yorkshire & Humber region was a rise in new orders. Inflows of new business rose at the start of 2019, despite the rate of growth easing slightly to a three-month low. New business has increased continuously on a monthly basis since August 2016.

Businesses in Yorkshire and the Humber continued to create jobs at the start of 2019, thereby extending the current sequence of employment growth in the region to 29 months. The pace of hiring was also quicker than December.

The region’s businesses faced a slower rise in average input costs during January, with the rate of inflation easing to a 28-month low. Surveyed companies reported higher prices for energy and a range of raw materials, particularly chemicals.

Prices charged for goods and services were raised as a result, although the rate of increase in January was the least marked since last February.

Richard Topliss, chair of NatWest North Regional Board, said: “The start of 2019 saw a mixed picture for Yorkshire and the Humber’s private sector economy. Output and new business among regional firms increased at the slowest rate since October 2018.

“However, the region continued to outperform the UK as a whole, whilst the pace of job creation quickened slightly from December.

“On the price front, similar to business activity, rates of both input cost and output charge inflation slowed, down to their lowest for 28 and 11 months respectively. Despite this, the rates of increase in operating expenses and selling prices continued to outpace those seen at the UK level.

“Looking forward, the outlook for activity over the coming year was optimistic, with around 46% of surveyed firms forecasting an increase in activity against 18% that expect a fall. An improvement in overseas markets, investments in R&D and expectations of greater business activity were cited as reasons to be upbeat.

“All in all, Yorkshire and the Humber’s private sector economy is on firm ground for further growth as we move through 2019.”

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