Near record levels of output for Yorkshire’s businesses

The latest NatWest Yorkshire & Humber Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors as measured in the Purchasing Managers’s Index (PMI) – increased to 64.5 in June, from 63.7 in May.

This move signals the sharpest expansion in private sector activity since August last year with the index only 0.1 point shy of matching the survey record set ten months ago.

Of the 12 monitored UK regions, Yorkshire & Humber observed the third-fastest expansion in output and was only outpaced by the North West and Wales. The region was also only one of two – the other being London – where activity growth accelerated when compared to May.

The latest data also showed a growth in new orders placed with private sector companies in the region, although the pace of increase slowed from May. However it was the second-quickest since the survey data were first collected in 1997.

Despite the positivity the Future Activity Index edged down to a five-month low in June, it was still 31.6 points above the 50.0 mark which separates optimism and pessimism and therefore signalled a strong level of business confidence. With Yorkshire & Humber topped the regional optimism rankings in June.

Staffing levels across private sector companies in the region increased for a fifth month, with firms noting employment was expanded to support growth in the coming months.

Private sector businesses in Yorkshire & Humber observed soaring input cost inflation during June. In fact, firms registered the strongest increase in their operating expenses for 13 years. According to surveyed companies, shortages at suppliers for a wide range of inputs continued to exert upward pressure on prices. At a sector level, manufacturers led the increase, but inflation was also sharp across services firms.

In response to intensifying cost pressures, private sector firms across the region increased their prices by the largest amount since data on output prices were first compiled in 1999.

Richard Topliss, chairman of NatWest North Regional Board, said: “The Yorkshire & Humber PMI delivered another strong month during June. The Business Activity Index was just a fraction off matching its survey record seen last August and signalled a sharp uptick in output growth. Out of the 12 monitored UK regions, Yorkshire & Humber was just one of two where activity growth actually accelerated on the previous month. Supporting the latest expansion was a further strong improvement in demand conditions, which firms linked to loosening lockdown restrictions. That said, survey data pointed to sharper rates of input cost and output price inflation during June. Price pressures are particularly acute in the manufacturing sector, but we’re now seeing a significant spillover into services. With the release of pent-up demand providing such a boost to sales for now, we will continue to watch this space to see what the impact will be of rising prices.”

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