Business conditions remained challenging in most areas, though ten out of the 12 monitored regions saw improved business confidence.

The PMI Business Activity Index is the first fact-based indicator of regional economic health published each month, tracking the monthly change in the output of goods and services across the private sector. A reading above 50 signals growth, and the further above the 50 level the faster the growth signalled.

Of the 12 regions monitored by the survey, only London saw a rise in output in December. Its Business Activity Index registered 51.6, which was consistent with a modest rate of growth.

Output was unchanged in Scotland (50.0) following a brief increase in November. All remaining areas, however, saw a contraction. The sharpest of these was in Northern Ireland (44.2), albeit with the rate of decline easing from the previous month. By contrast, output fell more quickly in the North East (44.8), South West (46.0), Yorkshire & Humber (47.6) and East Midlands (48.5).

The North West (48.7), East of England (49.1), Wales (49.3), West Midlands (49.3) and South East (49.4) all saw modest drops in business activity in December.


London topped the regional rankings for growth of new business for the fifth time in the past six months. Firms in the South East and West Midlands also saw demand improve, albeit only modestly. New orders neared stabilisation in Wales and the East of England, but fell in all remaining areas. Northern Ireland saw the steepest decrease, despite the rate of decline easing to the weakest for seven months.


As has been the case in six of the past eight months, London recorded the only rise in backlogs. Though remaining modest, the rate of accumulation picked up to the quickest since July 2018. There was a renewed decline in Scotland following no change in November. The North East recorded the steepest drop in outstanding business for the fifth month running, with the South West also seeing a sharp reduction.

London led employment growth for the second month running in December, posting its strongest increase in headcounts since last July. There were further modest rises in workforce numbers in the South West and East of England, while both the North West and Northern Ireland saw employment return to growth. Scotland and the West Midlands each saw no change in staffing levels, while the North East registered the steepest fall.


Prices charges for goods and services rose in ten of the 12 monitored regions in December. The South East recorded the fastest rate of inflation, albeit one that was only modest, followed by the East Midlands and East of England. At the other end of the scale, the North East saw output prices fall for the fifth month running and at the fastest rate since June 2009. Northern Ireland also recorded a decline for the first time in over four years.

Input price inflation in December was joint-fastest in Wales and Northern Ireland. However, whereas the former saw costs rise the most for six months, for the latter the increase was the weakest for three-and-a-half years. Scotland was ranked third and was one of the six remaining areas that saw cost pressures intensify from November. Firms in the North East faced the slowest rise in operating expenses for the second month running.


Ten of the 12 monitored regions recorded an improvement in output expectations in December, the most since April last year. The East Midlands registered the strongest overall level of optimism, having also seen the biggest upswing in sentiment from the month before. The South West was second in the rankings, closely followed by the West Midlands. Business confidence was weakest in Northern Ireland, but at an 11-month high, nonetheless.

Sebastian Burnside, NatWest Chief Economist, commented: “Though London was again the clear standout in December in terms job creation and overall growth, the latest data do suggest that many of the UK’s regions will be starting the new year on a firmer footing as we see more instances of higher demand, employment and business confidence than in previous months.

“2019 was a year to forget for many regional economies. Northern Ireland and the North East stood out as two of the worst-performing areas when looking at the PMI surveys across the year. However, even in areas that have been hit particularly hard in 2019, there is now renewed optimism that the unwinding of economic and political uncertainty will support business activity as we move into a new decade.”

View the latest NatWest Regional PMI®.

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