Economic analysis

September sees further broad-based increase in business activity

Latest Regional PMI® data from NatWest showed further broad-based improvements in business activity and employment across all nations and regions in September. However, supply chain issues and labour shortages generally constrained growth, whilst also leading to strong upward pressure on costs and prices.

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 expansion signalled. 

There were pockets of strong business activity growth in September, with Wales (index at 57.1), the West Midlands (56.3), Scotland (56.1) and London (55.9) seeing the fastest increases respectively. A number of areas continued to see a loss of momentum, however, including the North East (51.0), which remained at the foot of the rankings and saw only a marginal rise in activity on the month.


Demand continued to improve across almost all areas in September. The only exception was Northern Ireland*, where new business fell – albeit marginally – for the first time in six months. Wales recorded the strongest overall rate of new order growth for the third successive month, though the South East was the only region to register a faster rate of increase than in the previous survey period. 


Rates of job creation generally eased in September. Still, employment rose notably across the majority of nations and regions, the only exception being the North East, where the level was little-changed since August. The fastest rate of workforce growth was once again recorded in London, with Wales and Scotland ranked second and third respectively.

Ten of the 12 monitored areas saw a rise in outstanding business in September, with firms in the North East and Northern Ireland reported renewed – albeit marginal – declines. Those in Wales recorded the most marked build-up of backlogs, as has been the case in each of the past four months. Slower rates of accumulation were recorded in most regions, however.


Cost pressures remained universally strong across all nations and regions in September. Northern Ireland recorded the sharpest rate of input price inflation, followed by Wales and the West Midlands respectively. London was at the bottom of the rankings, though even here the rate of increase in operating expenses accelerated and was at a record high (since 1997).  

All regions recorded faster increases in output prices in September. Furthermore, in seven of the 12 monitored areas , the rate of inflation was at a series-record high. Northern Ireland once again registered the steepest rise in average prices charged, followed by Wales. Despite seeing a notable acceleration in the rate of output price inflation, London remained at the foot of the rankings.   


Expectations towards activity over the coming year remained strongly positive in all areas during September. For the third time in the past five months, firms in the South East showed the strongest optimism, followed by their counterparts in Yorkshire & Humber. Confidence eased in the majority of areas, however. Northern Ireland was one of the exceptions but still recorded the weakest sentiment overall.

* Coverage in Northern Ireland also includes construction and retail, which were the main drags on new business.


Sebastian Burnside, NatWest Chief Economist, commented:

"We've seen business activity levels rise across all nations and regions throughout the third quarter, as local economies continued to show signs of recovery. However, while growth has naturally slowed down compared to the initial reopening phase 'boom', it is also being increasingly constrained by supply chain issues and labour shortages.

"We saw notable increases in employment in most areas in September, but rates of job creation generally slowed as firms widely reported difficulty filling vacancies. 

"These imbalances between supply and demand across both raw material and labour markets are generating sharp inflationary pressures in all parts of the UK. And with demand still recovering, we're seeing companies increasingly passing on higher costs to customers, with latest data showing record rates of output price inflation in seven of the 12 areas monitored by the survey. 

“Though expectations generally remain positive, business confidence has taken a bit of knock in most regions. And that’s even before factoring in the impact of the fuel crisis and surge in energy prices, which the survey data for September won’t have fully captured.” 

Download the September NatWest Regional PMI® report (PDF 338KB)

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