Key Findings
- Ten UK nations and regions record higher business activity in July, up from just three in June
- Costs pressures ease in all areas, leading to generally slower rises in prices for goods and services
- Growth expectations recover further across most parts of the UK
The latest NatWest Growth Tracker survey showed business activity rise across the majority of UK regions at the start of the third quarter, supported by reduced cost pressures and a general improvement in business confidence.
The Tracker's headline figure is the Business Activity Index. Any reading above 50.0 signals growth, and the further above the 50.0 threshold it is, the faster the rate of signalled growth.
July saw business activity growth widen across the UK, with 10 of the 12 nations and regions reporting higher activity, up from just three in June. London once again topped the rankings with an index reading of 55.3, ahead of the South East (53.2) and Northern Ireland (51.4).
Scotland (47.3) and Yorkshire & Humber (49.1) were the only areas to record decreases in output.
Commenting on the Tracker’s findings, Sebastian Burnside, NatWest Chief Economist, said:
"Most areas of the UK enjoyed a positive start to the third quarter, seeing output levels rise as price pressures eased further from their recent highs.
"Business activity growth widened to encompass all but two of the 12 UK nations and regions monitored in July, supported in most cases by improved trends in underlying demand. Moreover, firms in most areas were increasingly upbeat about the outlook, raising the prospect of stronger growth in the second half of the year.
"Rates of increase in business costs fell sharply across the board, which reduces the upside risks to headline inflation and thereby the chances of an increase in interest rates in the coming months.
"Adding to the positive news, there were further signs that labour market conditions are beginning to stabilise, with July seeing workforce numbers fall at slower rates in most cases and even rise in some parts."
Demand
Companies in London recorded the strongest increase in new business for the third month in a row in July. They were followed by those in the South East. Four other regions recorded greater intakes of new work, but the rates of growth were marginal. The most marked reduction in demand for goods and services was recorded in Scotland.
Inflation
The latest data showed a broad-based reduction in rates of input cost inflation faced by businesses across the UK, taking them further from the highs seen in the second quarter of the year. That said, cost pressures remained elevated by historical standards. Firms in Northern Ireland recorded the steepest in rise in operating expenses, and those in the East of England and the North East the joint-slowest.
Although average charges for goods and services continued rising across all parts of the UK, reflecting the pass-through of high costs to customers, rates of inflation typically eased from the month before. Only firms in the South East recorded a faster rise in July, but the rate of inflation there was still well below April's recent peak.
Employment
Labour market conditions remained subdued across most parts of the UK at the start of the third quarter. The majority of areas saw lower employment, albeit with rates of decline easing in most cases. Scotland went against the trend and recorded an increase in workforce numbers, while Northern Ireland saw little-change.
Capacity
A decrease in backlogs of work across 11 of the 12 UK nations and regions monitored pointed to a general lack of pressure on business capacity in July. The steepest decline in outstanding business was recorded in Wales, followed by Scotland. Work-in-hand fell in all areas except London, which saw no change from the month before.
Outlook
There was an improvement in business expectations towards activity in the year ahead in the majority of UK nations and regions in July. The North West recorded the most market uptick in confidence and the highest overall degree of optimism. Firms in Northern Ireland remained the least upbeat, though sentiment there rebounded to a four-month high.
NatWest UK Regional Growth Trackers
NatWest East of England Growth Tracker (pdf, 795 KB)
NatWest East Midlands Growth Tracker (pdf, 766 KB)
NatWest West Midlands Growth Tracker (pdf, 776 KB)
NatWest Yorkshire & Humber Growth Tracker (pdf, 1 MB)
NatWest London Growth Tracker (pdf, 682 KB)
NatWest North East Growth Tracker (pdf, 759 KB)
NatWest North West Growth Tracker (pdf, 782 KB)
NatWest South East Growth Tracker (pdf, 810 KB)
NatWest South West Growth Tracker (pdf, 845 KB)
Royal Bank of Scotland Growth Tracker (pdf, 750 KB)
Ulster Bank Nothern Ireland Growth Tracker (pdf, 699 KB)
NatWest Wales Growth Tracker (pdf, 766 KB)
Contact
NatWest
Jessica Barker
Regional Affairs Manager
+44 7483 636493
jessica.barker@natwest.com
S&P Global Market Intelligence
Phil Smith
Economics Associate Director
+44 1491 461 009
phil.smith@spglobal.com
Hannah Brook
EMEA Communications Manager
+44 7483 439 812
hannah.brook@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 July were collected 9-29 July 2026.
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.
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