Yorkshire and the Humber reports fastest regional growth in August
Yorkshire and the Humber reported its strongest expansion of private sector output since last autumn in August, according to data from the NatWest Yorkshire and Humber PMI.
The region’s boost in economic growth was supported by a rise in new business volumes and a strong upturn in staffing levels.
Increased input cost inflation remained a key area of concern for businesses in the region, reflecting rising prices for imported goods, higher fuel bills and greater staff salaries.
The NatWest Yorkshire and Humber Business Activity Index is a seasonally adjusted index that measures month-on-month changes in the combined output of the region’s manufacturing and service sectors.
At 56.1 in August, the index picked up from 55.0 in July and remained well above the 50.0 no-change mark.
The latest rise in Yorkshire and the Humber private sector output was the strongest since October 2017 and the joint-fastest of all UK regions. Manufacturers experienced a particularly strong increase in production, with firms in the region citing the expansion of sales in the US and across Asian emerging markets.
Yorkshire and the Humber businesses also recorded their largest increase in new work since February. The latest improvement in order books was the strongest of all 12 UK regions. Survey respondents cited client demand and a number of manufacturers commented on a boost to export sales from the weak pound.
Backlogs of work declined slightly in August, thereby indicating that capacity pressures moderated across the Yorkshire and Humber private sector economy. Evidence suggested that long-term business investment plans and additional staff recruitment had helped to boost operating capacity in August.
The latest increase in payrolls was the largest since November 2017 and the strongest of all 12 UK regions.
Higher input costs have been recorded by Yorkshire and the Humber firms for almost two-and-a-half years, which is the longest sustained period since 2008. The rate of input price inflation eased to a three-month low in August, but remained stronger than its long-run average.
Business confidence moderated in August dropped below the trend seen so far in 2018. However, the region remains far more upbeat than elsewhere in the UK. Survey respondents partly linked their optimism to opportunities in new export markets.
Richard Topliss, chair of NatWest North Regional Board, commented: “Yorkshire & Humber was the leading part of the UK for economic growth and private sector job creation in August, according to the latest NatWest PMI surveys.
“A strong appetite for business investment spending and success in new export markets has helped the region to cement its place as a star performer so far this year.
“Improving order books underpinned efforts to boost business capacity in August. Yorkshire and Humber firms remain far more upbeat about the year-ahead outlook than elsewhere in the UK.
Topliss added: “Stretched supply chains were reported as a potential headwind to growth by manufacturers in the region. Survey respondents also cited concern at recent political uncertainty, although a sizeable number remained sanguine about managing Brexit-related disruption at their own businesses.
“It’s encouraging to see that Yorkshire & Humber companies saw a moredation in their cost pressures during August. However, higher oil-related prices and the recent weakness of sterling will likely contribute to additional input cost rises for businesses in the coming months.”
