• Business activity falls in nine out of 12 regions and nations in December
  • Costs pressures, although still high, retreat to multi-month lows
  • More regions report falling employment levels


The majority of UK regions and nations saw business activity fall further in December, latest Regional PMI® data from NatWest showed, with signs that the economic slowdown was hitting a growing number of local labour markets. More positively, pressure on demand from sharply rising prices eased somewhat, with the survey's measures of inflation retreating further from their recent record highs.   

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.

Of the 12 UK regions and nations monitored, only Wales and London recorded a rise in business activity in December (indexes at 52.0 and 50.2, respectively), while the North West (50.0) saw no change. This nevertheless represented an improvement from the broad-based decline seen in November. Northern Ireland* (41.6) meanwhile moved to the bottom of the rankings, having seen a sharp and accelerated fall in output.



11 out of the 12 regions and nations monitored by the survey recorded lower intakes of new work in December, with the most marked fall seen in Northern Ireland. However, in over half cases, the rate of decline slowed from the previous survey period. Only Wales went against the broader trend and recorded a rise in inflows of new business, its first since last July.



Slower rates of input price inflation were recorded across the board in December. Nevertheless, cost pressures generally remained elevated by historical standard. Even in the North West, which registered at the bottom of the rankings, the rate of input cost inflation remained firmly above its historical series average. Firms in Northern Ireland posted the steepest rise in input prices.  

Higher costs led to further notable increases in average prices charged for goods and services across all regions and nations in December. However, rates of inflation generally retreated further from their recent record highs. One of the exceptions was the West Midlands, which recorded the steepest overall rise in output prices, with the South West being the other.



The number of areas of the UK reporting falling employment levels increased from just two in November to seven in December. The steepest reduction in headcounts was in the North East. By contrast, the North West saw the fastest rate of job creation, with the South East, West Midlands and Wales also posting further, albeit marginal, rises in workforce numbers.

December's survey showed a broad-based decline in outstanding business (i.e. orders received but not yet completed). The sharpest decline was in the East Midlands, where the rate of depletion quickened to the fastest in over two-and-a-half years. At the other end of the scale, London recorded only a factional fall in backlogs, which was its first eight months.     



Business sentiment towards future activity generally remained subdued in December, with expectations in all regions and nations remaining below their respective historical series averages. That said, confidence improved in most areas. This included the South East, which topped the rankings ahead of Yorkshire & Humber. Only in Northern Ireland did pessimists outnumber optimists.

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



Sebastian Burnside, NatWest Chief Economist, commented:

"For most regions and nations, 2022 ended disappointingly with a further decrease in business activity. It marked a stark contrast to the situation during the first two months of the year – before the onset of war in Ukraine and the escalation of the cost of living crisis – when we saw broad-based growth and business confidence was sky-high amid the waning impact of the pandemic.

"Price pressures reached new heights in 2022, with every nation and region seeing record increases in average charges for goods and services at some point during the year. Positively, underlying price pressures have begun to cool, with rates of business cost inflation slowing to multi-month lows in all areas in December.

"Even so, the pace of price increases remains well above what is considered ideal, and a tight labour market is likely to mean that some of this inflationary pressure stays in the system as workers seek higher pay to compensate for the rising cost of living. More and more cracks are starting to appear in the labour market, however, with more regions reporting a fall in employment than a rise for the first time in almost two years in December.

"After repeated knocks throughout 2022, business confidence looks to have steadied in December. However, business expectations remain historically low across the UK, given what is a challenging outlook for 2023."


Read the full NatWest UK Regional PMI Report December 2022 (PDF 234KB).




Noel Davies

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S&P Global Market Intelligence

Phil Smith

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Notes to editors


The NatWest UK Regional PMI® data are compiled by S&P Global from responses to questionnaires sent to companies that participate in S&P Global’s UK PMI surveys. S&P Global compiles data for nine English regions, Scotland, Wales and Northern Ireland (NUTS 1 definitions).

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

The headline figure for each region is the Business Activity Index. This is a diffusion index calculated from a single question that asks for changes in the volume of business activity (at service providers) or output (at manufacturers) compared with one month previously. The Business Activity Index is comparable to the UK Composite Output Index. It is sometimes referred to as the ‘PMI’, but is not comparable with the headline UK Manufacturing PMI figure.

Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

The survey data for December were collected 6 – 21 December 2022.

For further information on the PMI survey methodology, please contact economics@ihsmarkit.com.

About PMI

Purchasing Managers’ Index® (PMI®) surveys are now available for over 40 countries and also for key regions including the eurozone. They are the most closely watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to ihsmarkit.com/products/pmi.html.

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