Broad-based decline in regional business activity in October

Key Findings

  • All 12 monitored UK regions and nations record lower business activity
  • Rates of job creation generally slow amid darkening business outlook
  • Firms in majority of regions see slower, albeit still sharp, rises in costs

The downturn in UK economic activity broadened to encompass all regions and nations in October, latest Regional PMI® data from NatWest showed. Soaring inflation and heightened levels of uncertainty served to dampen demand, despite the survey indicating some easing of price pressures. With businesses generally becoming less optimistic about growth prospects, rates of job creation slowed in most areas. 

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.

October saw a fall in business activity across all 12 monitored regions, the first time this has been the case since the third national lockdown in January 2021. The South West posted the steepest decline (index at 42.3), followed by Northern Ireland* (44.4) and the North East (45.7) respectively. London's decline in activity was only marginal (49.7), but nonetheless its first for over a year-and-a-half.


Latest data showed a general weakening of demand conditions across the UK in October, as evidenced by a broad-based decline in inflows of new work. Northern Ireland recorded the most marked fall, its steepest since January 2021, followed by the North East. London and the West Midlands saw demand fall the least, with the latter recording a slower rate of decline than in September.       


Each region saw further strong upward pressure on business costs in October, with rates of input price inflation remaining well above their historical series averages. Operating expenses rose more slowly than in September in the majority of cases, however, including in the South West, which saw the weakest overall increase. Firms in Northern Ireland noted the steepest rise.   

As was the case with input costs, prices charged rose sharply across all areas of the UK at the start of the fourth quarter, but rates of increase generally eased further from their recent peaks. Wales was one of the exceptions (along with Scotland), recording a slightly faster rise in output prices and thereby remaining at the top of the rankings.  


Employment continued to rise across almost every UK region and nation during October, the only exception being the North East where workforce numbers decreased for a fifth successive month. However, in most cases, rates of job creation slowed. This included the South East – the region at the top of the rankings for employment growth. 

There were mixed trends in backlogs of work by region in October, hinting at varying degrees of pressure on business capacity. Four of the 12 monitored areas recorded higher levels of outstanding business. This included London, where the rate of accumulation remained solid. At the other end of the scale, Northern Ireland, Wales and Scotland noted steep declines.    


Business expectations, although often still positive, weakened in most cases in October. Firms in Northern Ireland and the North East even noted increased pessimism towards the outlook. Business confidence in the South West was unchanged from September's record low, while Scotland went against the broader trend and registered the strongest optimism for three months.

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


Sebastian Burnside, NatWest Chief Economist, commented:

"The UK's economic downturn reached an unwelcome milestone in October, with latest NatWest PMI data showing a reduction in business activity across all 12 regions and nations monitored by the survey – the first time this has been the case since January 2021.

"What's more, when it comes to prospects for the coming year, business confidence is at historically low levels across the board, which bodes ill for future investment and job creation, among other things.

“Regional labour markets continued to show resilience during October. That said, there were yet more signs that conditions have begun to cool, with falling levels of activity and a gloomy economic outlook causing firms take a more cautious approach to hiring. Of the 11 regions that recorded a rise in employment in October, eight saw a slower rate of job creation, while there was a further decrease in employment in the North East.

"Sharply rising costs remain a key challenge for businesses throughout the UK. Firms' input prices – and indeed their output prices – rose at a slower rate in most regions in October, but inflationary pressures remain stubbornly high and point to the prospect of further interest rate hikes and, thereby, a further squeeze on demand."








Noel Davies

Regional Campaign Manager

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S&P Global Market Intelligence

Phil Smith

Principal Economist

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Sabrina Mayeen

Corporate Communications

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View full NatWest UK Regional PMI® report here. (PDF 250KB)

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