Key Findings

  • New business falls in majority of regions and nations in July
  • Nine out of 12 monitored areas report higher employment
  • Rates of output price inflation slow in most cases


The number of UK regions reporting growth in business activity fell to the lowest in six months in July, according to the latest NatWest Regional PMI® survey, amid a broadening decline in demand. Trends in employment were comparatively more resilient, with the majority of areas seeing workforce numbers rise. Meanwhile, price pressures generally remained elevated, although slower increases in prices charged for goods and services were recorded in most cases.    

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.

Only half of the 12 monitored regions and nations recorded growth in business activity in July. London posted the strongest rate of expansion but saw a notable loss of momentum as growth slowed to a six-month low (business activity index at 52.3). The South East (49.6) and Northern Ireland* (48.2) fell the joint-most places in the rankings as both returned to contraction territory, though the steepest overall decline in activity was recorded in the North East (46.8).



Most areas recorded a fall in new business in July, the only exceptions being London and the West Midlands where rates of growth slowed notably. The most marked reduction in new work was seen in Wales, which saw demand for goods and services fall to the greatest extent since October last year. Northern Ireland and the North East also recorded solid decreases in new business.   



After a broad-based slowdown in June, rates of input price inflation ticked up in most cases in July. The strongest cost pressures were recorded in London, in line with the trend since February, followed by the South West. The softest rate of input price inflation was seen in Northern Ireland where it slipped to the lowest in over three years. Slower increases were also seen in Scotland and the North East.

Despite easing in most areas, rates of output price inflation generally remained above the respective historic averages in July. The only exception was Northern Ireland, where average prices charged rose only modestly and at the slowest rate since September 2020. Firms in London noted the greatest hikes in selling prices, followed closely by their counterparts in the South East.  



The strongest rate of job creation in July was seen in the South West, followed by the East of England and then London. Northern Ireland also posted a solid rise in workforce numbers. At the other end of the scale, there were renewed declines in staffing levels in both the East Midlands and North East, while no change in employment in the West Midlands ended a 28-month sequence of growth in the region.

Backlogs of work fell across every region and nation in July, pointing to a universal easing of pressure on business capacity. Wales recorded the steepest overall decline in outstanding business for the sixth month in a row. The slowest decline was recorded in London. Here, work-in-hand fell only modestly, but it was nevertheless the first decrease in seven months and the most marked fall since April 2022.     



Trends in business confidence were mixed, with half of the 12 monitored areas posting an improvement in sentiment and the rest seeing a decline. The West Midlands, South East and Yorkshire & Humber topped the rankings and were among those that saw expectations rise since June. Firms in Scotland were the least optimistic about the year-ahead outlook, with sentiment there hitting a six-month low.  

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


Sebastian Burnside, NatWest Chief Economist, commented:

“Latest PMI data showed mixed fortunes for the UK's regional economies at the start of the third quarter, with half seeing a rise in a business activity and the remainder recording a contraction. These are the worst set of results since January. Furthermore, even in areas where output did rise, growth was often driven by work on outstanding business rather than new demand, which doesn't bode well for the outlook.    

"Employment remained a bright spot for most areas, with nine of the 12 monitored regions and nations seeing a rise in staffing levels. However, that was the fewest since March and rates of job creation often slowed, which raises some questions around the labour market's resilience in the second half of the year.

"There were both positive and negative takeaways on the inflation front as well. Rates of input cost inflation ticked up in most cases in July, which tended to keep them above their historic averages and led to firms once again raising their own prices. On the other hand, rates of increase in prices charged for goods and services slowed in the majority of areas, with growing competition for new work amid a backdrop of cooling demand restricting firms' pricing power."




Noel Davies

Regional Campaign Manager

+44 (0) 7970 332 895



Download the July 2023 NatWest UK Regional PMI® Report 

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