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Key Findings

 

  • Ten out of 12 regions see business activity grow, up from seven in July
  • London tops output growth rankings, while Northern Ireland continues to outperform on employment front
  • Growth expectations improve in most areas

 

The latest NatWest Regional Growth Tracker showed signs of improving business conditions across most parts of the UK in August. Output of goods and services rose in ten of the 12 nations and regions covered by the survey, generally supported by higher inflows of new business, while growth expectations for the year ahead also improved in the majority of cases.      

The Tracker – which surveyed businesses operating in the manufacturing and services sectors – showed business activity rising in ten out of 12 UK nations and regions in August. This was up from seven in July and the most since September last year.

For the second month in a row, business activity growth was led by London, where it reached a 16-month high. The East of England, South West, North East, East Midlands and South East also saw solid increases in output, while there were more modest rises in the West Midlands, North West, Wales and Scotland.

 

Commenting on the Tracker’s findings, Sebastian Burnside, NatWest Chief Economist, said:

“Businesses in most parts of the UK enjoyed a better month in August. London continued to lead the way, though the East of England, South West and North East are also worthy of special mentions having seen solid rates of growth.

"Encouragingly, the Tracker's forward-looking indicators have generally improved. Alongside an increase in new business in most areas, we saw stronger business expectations in the majority of cases.

"Efforts to mitigate rising costs continue to be reflected in adjustments to workforce numbers. However, taking a glass half full perspective, most regions did see employment fall more slowly than the month before. 

"Price pressures remain stubbornly highly across the UK, with costs rising more quickly than the long-run average in all areas.”

 

Demand

Inflows of new work increased in the majority of areas in August, following a broad-based decline the month before. London recorded the strongest growth in new business, its fastest for ten months, followed by the South West and South East, respectively. At the other end of the scale, Northern Ireland and Yorkshire & Humber continued to record the weakest trends in demand.     

                                                                      

Employment

Northern Ireland continued to outperform on the employment front in August, its modest rise in workforce numbers contrasting with decreases in all other areas of the UK. Rates of decline eased in over half of cases, however, slowing most noticeably in London and the North East. The East of England saw the most marked reduction in staffing levels.

 

Capacity

A renewed fall in backlogs of work in Scotland during August meant that once again all 12 nations and regions recorded a reduction – the fourth time in the past six months in which this has been the case. Capacity pressures were weakest in Wales, where outstanding business fell to the greatest extent so far this year.  

            

Inflation

Seven out of the 12 UK nations and regions monitored recorded stronger rates of input cost inflation in August, while the South East saw no change from the month before. Despite being one of the four areas where the rate of increase eased, Northern Ireland continued to register the highest overall cost pressures, as it has done for the past three months.                      

As well as facing the sharpest rise in operating expenses, firms in Northern Ireland recorded the most marked increase in average prices charged for goods and services in August. Rates of output price inflation quickened from the month before in most areas, with the East Midlands recording the greatest acceleration.    

 

Outlook

Just over half of the 12 UK nations and regions monitored by the survey saw an improvement in business expectations for the year ahead in August. The West Midlands recorded the highest overall degree of optimism, as has been the case in four of the past five months, while London saw the largest upswing in sentiment since July.

 

Follow our Chief Economist Sebastian Burnside on LinkedIn for more insights. 

NatWest Regional Growth Tracker

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Royal Bank of Scotland Growth Tracker

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NatWest

Jonathan Rennie

Regional Media & Campaigns Manager

+44 7769 932 102

jonathan.rennie@natwest.com

 

S&P Global Market Intelligence

Phil Smith

Economics Associate Director

+44 1491 461 009

phil.smith@spglobal.com

Notes to editors

Methodology

The NatWest UK Regional Growth Tracker 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 Scotland, Wales, Northern Ireland and nine English regions*.

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.

The survey data for August were collected 12-27 August 2025.

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

*International Territorial Level 1 definitions.

 

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 www.spglobal.com/marketintelligence/en/mi/products/pmi.

 

About S&P Global (NYSE: SPGI)

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