The North East private sector remained in growth territory in June, according to the latest NatWest Growth Tracker, despite a slowdown in activity and a sharp drop in employment. The Business Activity Index, which measures month-on-month changes in manufacturing and services, fell to 50.8 from 53.8 in May, but any reading above 50 indicates expansion.
Regional Performance Outshines UK Average
The North East outperformed the UK as a whole, where activity contracted in June. Among the 12 monitored UK regions and nations, only London and the South East recorded better trends for business activity. This relative resilience helped bolster confidence among private sector firms, with optimism about output over the coming year rising to a three-month high.
Cost pressures also receded during the month. The rate of input price inflation eased to its lowest since February, though it remained elevated by historical standards. Businesses continued to raise their own charges at a marked, albeit softer, pace to protect margins from high cost burdens.
Employment Falls Sharply
However, concerns were raised over job losses, which came at the steepest levels since November last year and were sharper than the UK average. Malcolm Buchanan, chair of the NatWest North regional board, said: “The North East saw growth momentum falter as the first half of 2026 drew to a close, according to the latest NatWest Growth Tracker. New business placed with private sector firms increased for the seventh month running, but the rate of growth slowed to a fractional pace that was the weakest over this period and contributed to a much slower rise in overall business activity.
“Nonetheless, the region remained one of only three monitored UK areas to record growth in June, alongside London and the South East. This relative resilience helped support confidence among private sector firms, with optimism about the year ahead rising to a three-month high.
“Companies also reported a further easing in cost pressures at the end of the second quarter. The rate of input cost inflation fell to its lowest since February, though it remained high by historical standards. Firms continued to raise their own charges at a marked, albeit softer, pace as they sought to protect margins from elevated cost burdens.
“At the same time, businesses moved to protect cashflow by controlling expenditure elsewhere. Employment fell at the sharpest pace since November last year, underlining the pressure firms continue to face even as demand remains in positive territory.”
Upcoming Economic Data
The release of the growth tracker comes ahead of key economic data showing the state of the regional economy. Unemployment and labour market data will be published next Tuesday, including regional figures, followed by national inflation data the next day.
