Yorkshire and Humber business activity slips into decline, survey suggests

The latest NatWest Growth Tracker show a slowdown from private sector firms

Cost inflation for firms in Yorkshire and Humber has hit a three-year high, pushing the region’s private sector economy into decline, a new survey suggests.

NatWest’s Yorkshire & Humber Business Activity Index, which measures change in the area’s manufacturing and service sectors, posted a four-month low of 48.4 in March, down from 50.1 in February. Scores above 50 in the index denote growth.

The decline in local business output contrasted with a marginal expansion across the UK as a whole. But Yorkshire and Humber was one of just a few areas where business confidence did not fall in March.

Malcolm Buchanan, chair of the NatWest North Regional Board, said: “The immediate impact of the war in the Middle East is being felt by businesses in Yorkshire & Humber, with firms reporting the fastest increase in costs for over three years. The energy price shock has pushed fuel costs up sharply, squeezed supply chains and driven the price of oil-intensive goods higher.

“Cost increases are being passed on, but not fully, hinting at some reservation to ratchet up charges given the high degree of uncertainty surrounding the conflict and its duration. Companies continue to exercise caution, holding back on hiring, leaving vacancies unfilled and prioritising productivity growth.

“Backlogs of work fell in March, despite employment decreasing, indicating strong efficiency gains. Nonetheless, business confidence remained resilient. In fact, local firms were even more optimistic than in February, with the region just one of two across the UK where expectations picked up.”

The level of new business received by private sector companies in Yorkshire & Humber decreased during the latest survey period, marking the first monthly reduction since November last year. But Yorkshire & Humber companies were optimistic of activity growth in the next 12 months, with those expectations underpinned by investment plans, entries into new markets and upcoming product launches.

Headcounts fell during March but the rate of job shedding slowed for a second month in succession and was the softest since October 2025, in line with the overall UK trend.

The growth tracker has been released ahead of a week of key economic data being released. Next week sees the publication of monthly unemployment and inflation figures.