Private sector business activity continued to tumble in May

Yorkshire & Humber witnessed another big drop in private sector business activity, according to an index that measures month-on-month change in the output of the region’s manufacturing and service sectors

The seasonally adjusted NatWest Yorkshire & Humber Business Activity Index registered 28.9 in May, up from a record low of 15.9 in April.

It points to another sharp contraction in private sector business activity across Yorkshire & Humber, although one that was softer than April.

New orders placed with businesses in Yorkshire & Humber decreased markedly for the third month in a row during May.

Though the rate of decline eased from April’s series record, it remained among the fastest since data collection began in  January 1997.

Private sector firms in Yorkshire & Humber remained optimistic towards the one-year business outlook in May.

The degree of positivity improved to the strongest level since before the outbreak of coronavirus in Europe, supported by expectations for a recovery once lockdown restrictions are fully lifted.

In line with a further decrease in new work, businesses in Yorkshire & Humber continued to cut their staff numbers.

Despite easing from April, the rate of workforce contraction was still the second-sharpest in the survey history.

The latest decline was the joint-quickest across all 12 monitored UK regions in May (level with West Midlands).

May data pointed to another decrease in outstanding business at private sector firms in Yorkshire & Humber, extending the current sequence of reduction to 20 months. Though sharp overall, the rate of decline eased from April and was broadly in line with the UK average.

Input prices faced by private sector companies in Yorkshire & Humber fell for the second month in row during May. However, the rate of reduction eased from April and was only marginal overall.

Richard Topliss, chairman of NatWest North Regional Board, said: “National measures to stem the spread of COVID-19 continued to weigh heavily on Yorkshire & Humber’s private sector in May, with business activity continuing to fall substantially.

“Despite some firms reopening for business, demand conditions remain subdued as uncertainty surrounding the length of this crisis goes on.

“Yorkshire & Humber fared slightly worse than the national average in terms of activity during May.

“However, there were signs that businesses in the region have maintained better-than-average pricing power, with output charges falling at the second-slowest pace across all 12 monitored areas.

“Another positive came in the reading for future activity, which showed expectations recovering to a three-month high.

“Both of these results give a glimmer of hope to the Yorkshire & Humber economy, which faces challenging months ahead while the country continues to combat this virus.”