Economic analysis

June sees varying regional growth performances

Latest Regional PMI® data from NatWest showed levels of business activity across the UK diverging in June, with some pockets of solid growth contrasting with downturns elsewhere.

  • London outperforms in terms of both output and employment growth
  • Demand coming under pressure as five regions report a fall in new orders
  • Business confidence wanes in most areas amid inflation concerns


Latest Regional PMI® data from NatWest (PDF 252KB) showed levels of business activity across the UK diverging in June, with some pockets of solid growth contrasting with downturns elsewhere. All areas saw demand starting to come under pressure from persistently high inflation, however, with business expectations towards future activity falling in the majority of cases as a result.


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.


Regional performances varied markedly in terms of business activity in June. London led the growth rankings by some margin with a steep and accelerated rise in output (index at 60.3). However, three out of the 12 monitored areas recorded lower business activity, namely the East Midlands (49.4), East of England (47.9) and Northern Ireland* (42.9), the last of which saw output fall for the second month running and at the quickest rate since February 2021.



Just seven out of the 12 monitored regions recorded higher inflows of new work in June, the lowest number for 16 months. Even where an increase was recorded, the pace of growth slowed. Outright declines in demand were registered in the West Midlands, East of England, East Midlands, North East and Northern Ireland, the last of which saw a sharp downturn that was the steepest since February 2021.   



Businesses across all parts of the UK continued to face severe cost pressure during June. Although rates of input price inflation ticked down slightly in most cases, they tended to remain at near-record highs. Northern Ireland saw the steepest rise in costs, followed by the North East, with the latter being the only region to see a faster increase than the month before.  

Similar to the trends in input costs, rates of output price inflation remained historically elevated in June, despite retreating slightly from their recent peaks in the majority of cases. Northern Ireland topped the rankings ahead of the North East. The four lowest-ranked regions for cost increases, the East of England, Scotland, the South West and London, also occupied the bottom four positions for output price inflation.



Employment rose in almost every region in June, the only exception being the North East. Here, staffing numbers fell – albeit fractionally – for the second time in the past three months. London recorded the strongest rate of job creation, as has been the case in each month since February. Five areas recorded a slower rate of employment growth than the month before, however.

Seven out of 12 regions recorded lower backlogs of work in June, with a further three seeing rates of accumulation slow, in a sign of capacity pressures beginning to ease in most parts of the UK. This was particularly evident in the North East. London and the West Midlands bucked the trend, recording solid and accelerated increases in volumes of outstanding business.



Firms' expectations for activity in the year ahead generally worsened in June. Of the 12 monitored areas, only the West Midlands and Wales recorded stronger business confidence. Despite seeing sentiment weaken, Yorkshire & Humber remained the most optimistic region. Expectations were lowest in Northern Ireland, where they turned more pessimistic.

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


Sebastian Burnside, NatWest Chief Economist, commented:

"There are signs that demand is beginning to falter across parts of the UK, under pressure from historically high inflation and strained by the uncertain economic outlook. Five out of the 12 regions monitored by the PMI data saw inflows of new business fall in June, the most since the lockdowns in early-2021, whilst the remaining areas all saw growth of new business slow.

"Weaker demand has started to weigh on the actual output of goods and services in some areas. However, other regions showed a greater degree of resilience to the growing headwinds in June, and none more so than London, which recorded the strongest growth in business activity throughout the second quarter.

"The capital once again outperformed on the employment front, which is in fact an area of positivity for most regions, with only the North East seeing workforce numbers decline during June.

"Concerns over sustained high inflation served to dampen business confidence across most UK regions in June. Firms everywhere reported further hikes in prices charged for goods and services as they looked to offset rising costs, albeit with rates of increase ticking down in most cases from recent record highs."


Download the June 2022 NatWest Regional PMI® Report (PDF 252KB)

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