Business activity falls in Yorkshire and Humber, survey suggests

The NatWest Regional Growth Tracker pointed to a range of pressures facing businesses in the area

Business activity in the Yorkshire and Humber area saw a reduction in May, according to an influential business survey.

The NatWest Regional Growth Tracker, which measures change in the output of the region’s manufacturing and service sectors – dropped to 46.5 in May from 51.4 in April. The latest reading pointed to a second reduction in output in the past three months, with scores below 50 suggesting a contraction in the economy.

The pace of decline was the sharpest since last September and greater than the national average. Companies taking part in the survey indicated lower new orders amid weaker customer demand, as well as highlighting uncertainty among clients, which prompted hesitation in committing to new projects.

Efforts by Yorkshire & Humber companies to limit costs resulted in employment reductions in May, both through direct job cuts and the non-replacement of leavers. As a result, workforce numbers decreased sharply, marking the largest contraction since July last year.

Companies also had to contend with growing inflationary pressures, the survey found, but firms in Yorkshire and Humber remained above the national average for confidence in the year ahead.

Malcolm Buchanan, chair of the NatWest North Regional Board, said: “After showing signs of positivity in April, the Yorkshire & Humber region suffered a setback in May as market uncertainty and steep price rises suppressed demand and led to a renewed fall in business activity. In particular, cost pressures intensified again and were substantial, with firms locally suffering one of the sharpest increases in input costs across the UK.

“Price pressures stemmed from a range of sources, including energy, transportation, raw materials and staff, providing little respite for companies. In turn, cost cutting efforts meant that staffing levels decreased sharply.

“There were some positive signs in terms of the year-ahead outlook, however, with a number of companies planning business investment in an effort to boost activity over the coming 12 months.”

The survey has been released ahead of the release of key economic data this week on regional and national unemployment levels, and on the latest inflation figures.