• 11 out of 12 regions and nations see output fall at end of third quarter
  • Employment growth confined to just Northern Ireland and Scotland
  • Business cost pressures ease universally


The latest NatWest Regional PMI® survey indicated a near-universal decline in business activity across the UK in September, with only London eking out growth. Labour market trends also worsened as employment fell in all areas except Northern Ireland and Scotland. More positively, there was a broad-based easing of cost pressures faced by businesses.       

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.

Business activity fell across all but one of the 12 monitored UK regions and nations at the end of the third quarter, the exception being London. Furthermore, output in the capital increased at an accelerated rate (index at 52.4). The North East (43.7) recorded the sharpest drop in business, its quickest for more than a year, followed by neighbouring Yorkshire & Humber (44.5).



The majority of areas saw a decrease in inflows of new business in September, in a sign of demand for goods and services being under pressure. The fastest rate of decline was in the North East, where it was the quickest for almost a year, followed by Yorkshire & Humber and the North West respectively. The only noticeable increase in new work was in London, while the West Midlands saw broadly no change.   



Business cost pressures eased in September, with input prices increasing more slowly in all areas. The weakest rate of cost inflation was recorded in the West Midlands, which also saw the most marked deceleration from the month before. Firms in the South West faced the steepest rise in operating expenses, closely followed by those in the East Midlands and East of England.    

London led a broad-based rise in rise in output prices in September. Average charges for goods and services rose markedly across the capital, and at a slightly faster rate than the month before. Output price inflation also quickened in Scotland and the East Midlands, but slowed everywhere else. The North West recorded the softest rise in charges, the weakest there for three years.   



Employment growth was confined to just Northern Ireland* and Scotland in September, albeit with the rates of job creation there slowing to a crawl. Ten of the 12 monitored areas recorded a reduction in staffing levels, the highest number since January 2021. For the third month running, the deepest job cuts were seen in the North East.  

September saw another broad-based decrease in backlogs of work across the UK. Firms operating in Wales once again registered the most marked decrease in outstanding business, despite the rate of depletion there easing slightly from the previous month. At the other end of the scale, work-in-hand fell only modestly in both Scotland and London.   



As was the case throughout the third quarter, firms in the West Midlands were the most optimistic about future activity in September. Next in the rankings was the South East, which was one of seven regions where confidence improved. The most marked month-on-month increase in sentiment was in the East of England. Business expectations were lowest in the North East.  


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


Sebastian Burnside, NatWest Chief Economist, commented:

"September's PMI results paint a rather gloomy picture of the health of the UK's regional economies, with business activity falling almost universally during the month.

"London is an outlier having recorded a further increase in output at the end of the third quarter, driven by resilient demand across the capital.

"But as a general rule, there's been less and less pressure on business capacity in recent months due to a slowdown in demand, so it isn't a shock to see employment start to fall across most areas.

"Latest data on firms' expectations for future activity were a little more encouraging, with confidence even ticking up in a small majority of the regions and nations covered by the survey.  

"Easing cost pressures are a reason for optimism. Rates of increase in firms' input prices slowed across the board in September, which should feed through to lower inflation generally in the months ahead."




Noel Davies

Regional Campaign Manager

+44 (0) 7970 332 895


September 2023 NatWest UK Regional PMI® Report

Download the September 2023 NatWest UK Regional PMI® Report 

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