Key Findings
- Most regions continue to record subdued trends in business activity
- Although still high, cost pressures eased across all UK nations and regions in June, with generally slower rises in prices charged
- Labour market resilience in Scotland contrasts with weakness elsewhere
Business activity was subdued across large parts of the UK in June, according to the latest NatWest Growth Tracker survey, amid a backdrop of elevated inflationary pressures. Positively, however, firms in all areas saw costs rise at a slower rate than the month before.
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.
Business activity rose across three of the 12 UK nations and regions monitored by the survey at the end of the second, matching the result seen the month before. Growth was once again confined to London (index at 54.1), South East (50.9) and North East (50.8).
At the other end of the scale, firms in Northern Ireland (43.9) posted the most marked fall in output, followed by those in Yorkshire & Humber (45.5).
Commenting on the Tracker’s findings, Sebastian Burnside, NatWest Chief Economist, said:
"After an encouraging start to the year for most of the UK's nations and regions, firms in nearly all areas found it tougher going in the second quarter as businesses and households alike felt the effects of higher oil prices and increased levels of market uncertainty. Encouragingly, however, we have seen signs of inflationary pressures easing in the latest data, with firms in all parts of the UK reporting slower increases in costs than the month before. If this easing of inflationary pressures continues, it will support further falls in headline inflation and increase the Bank of England’s scope to consider reducing interest rates.
"Aside from just a few pockets of growth, most notably in London and the North East, we saw a generally more subdued picture for business activity in June, reflecting some underlying softness in demand for goods and services. There's been greater scrutiny around spending as a result of the spike in price pressures and more clouded business outlook in recent months.
"Business confidence has also steadied across the UK, with the generally more settled geopolitical picture in June helping to lift firms' growth expectations."
Demand
Inflows of new business rose in just two areas of the UK, namely London and the North East. After posting a brief upturn in May, the North West joined the other nine UK nations and regions in recording lower intakes of new work in June. The steepest reduction was registered in Northern Ireland.
Inflation
Although cost pressures remained elevated by historical standards at the end of the second quarter, the latest data showed rates of inflation ease across all UK nations and regions from the highs seen in the previous two months. In some cases, such as the East of England and North East, rates of increase in input prices eased substantially from the month before.
Firms were generally less aggressive with their price increases in June, in line with an easing of underlying cost pressures. Rates of output price inflation in fact moderated in all areas except Wales, where the pace of increase was unchanged. Despite the slowdowns, however, prices charged continued to be raised steeply by historical standards, with Northern Ireland seeing the steepest rise.
Employment
Employment decreased almost across the board in June, with only Scotland going against the trend having seen a fractional rise in workforce numbers. Where staffing levels fell, rates of decline did however ease in nearly half of the cases. The East of England saw the steepest drop in headcounts, followed closely by Wales.
Capacity
There was a lack of pressure on business capacity across the board in June. All 12 of the UK nations and regions monitored by the report recorded a drop in backlogs of work, the second time in the past three months in which this has been the case. Northern Ireland posted the steepest drop, and London the softest.
Outlook
Although generally remaining subdued, expectations towards activity in the next 12 months improved in most areas of the UK in June. This included the West Midlands, which registered the highest overall degree of optimism towards future activity ahead of the East of England. Northern Ireland recorded the lowest business confidence, albeit with sentiment turning positive.
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 June were collected 11-26 June 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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