Key Findings

  • Further broad-based decline in business activity in November
  • Expectations improve in most areas but still historically subdued
  • Cost pressures remain elevated, and even intensify in majority of cases

Regional economies across the UK remained under pressure from sharply rising prices and falling demand in November, according to latest Regional PMI® data from NatWest. Business activity fell in all areas, while there were also further signs of a slowdown in local labour markets. Expectations towards the year ahead generally improved after having slumped in October, but they nevertheless remained subdued by historical standards amid persistent strong inflation and recession worries.  

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.

All 12 monitored regions recorded a further fall in business activity in November. Rates of contraction did, however, slow in just over half of cases, including Wales and the North East, the two top-ranked areas, where activity came close to stabilising (business activity indexes at 49.8 respectively). Scotland (43.9) recorded the most marked fall in output, followed by the South West (45.3).


November saw another broad-based decline in inflows of new work, pointing to a general weakening of demand for goods and services across the UK. Firms in Northern Ireland* once again recorded the steepest decrease, followed by those in the East Midlands. Notably, both Wales and the North East saw much slower rates of decline that were only marginal overall.       


Not only did rates of input cost inflation remain historically elevated in November, but they accelerated in the majority of cases. This included the East Midlands, which topped the rankings ahead of London and the South East. The slowest rise in costs was in the South West, though even here the rate of increase picked up from a 17-month low in October and was above its long-run average.   

Average prices charged for goods and services continued to rise sharply across the board during November, as firms in all areas looked to pass on higher costs to customers. Rates of output price inflation slowed in half of cases, including Wales, which nevertheless once again saw the steepest overall rise. Firms in the South West recorded the slowest increase, as was the case in October.  


Although workforce numbers rose across the majority of regions and nations in November, rates of growth slowed in most instances. The West Midlands saw the fastest pace of job creation, moving ahead of the South East in the rankings. The East Midlands and North East went against the trend and recorded lower employment, thought the declines were only marginal.   

Of the 12 monitored regions and nations, only London, Yorkshire & Humber and the West Midlands recorded higher levels of outstanding business in November. The increases were only modest, however. All other areas recorded declines in backlogs of work, the most notable of which were registered in Northern Ireland and Scotland.      


Business expectations improved almost universally in November, with the only exception being a slight decline in confidence in Scotland. Yorkshire & Humber was the most optimistic region and saw the joint-sharpest increase in sentiment from the previous month, with Wales. Firms in Northern Ireland and the North East remained pessimistic, albeit less so than in October.

* PMI survey coverage in Northern Ireland includes construction and retail, as well as manufacturing and services.



Sebastian Burnside, NatWest Chief Economist, commented:

"Back-to-back monthly contractions in business activity across all regions and nations highlights a general worsening of economic conditions across the UK as we move towards the end of the year.   

"There are growing signs that local labour markets are feeling the effects of the economic downturn, with most regions seeing a slowdown in job creation – to a crawl some cases – and East Midlands and North East even recording outright declines in employment. 

"After a sharp fall in business confidence in October in the wake of "mini" budget, November saw expectations improve across virtually all areas. Still, business confidence generally remained subdued, owing to continued concerns about persistent high inflation, rising interest rates and the prospect of a recession."      


View full NatWest UK Regional PMI® report here. (PDF 249KB)

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