Yorkshire and Humber Business Activity Declines Amid Soaring Costs
The latest NatWest Growth Tracker indicates a significant slowdown in private sector firms across Yorkshire and Humber, with economic activity slipping into decline. This downturn is primarily driven by cost inflation hitting a three-year high, according to the survey released on April 17, 2026.
Key Index Shows Four-Month Low
NatWest’s Yorkshire & Humber Business Activity Index, which monitors changes in the manufacturing and service sectors, recorded a score of 48.4 in March. This marks a four-month low, down from 50.1 in February. Scores above 50 denote growth, so this drop signals a contraction in the region's private sector economy.
This decline in local business output contrasts with a marginal expansion observed across the UK as a whole. However, Yorkshire and Humber stood out as one of the few areas where business confidence did not fall in March, showing resilience amid challenging conditions.
Impact of Global Conflicts on Costs
Malcolm Buchanan, chair of the NatWest North Regional Board, highlighted the immediate effects of the war in the Middle East on businesses in Yorkshire & Humber. He stated that firms are experiencing the fastest increase in costs in over three years, largely due to an energy price shock that has driven up fuel costs, squeezed supply chains, and increased prices for oil-intensive goods.
Buchanan explained, "Cost increases are being passed on, but not fully, hinting at some reservation to ratchet up charges given the high degree of uncertainty surrounding the conflict and its duration. Companies continue to exercise caution, holding back on hiring, leaving vacancies unfilled and prioritising productivity growth."
Employment and Business Outlook
Despite the decline in business activity, backlogs of work fell in March even as employment decreased, indicating strong efficiency gains among firms. Headcounts dropped during the month, but the rate of job shedding slowed for a second consecutive month and was the softest since October 2025, aligning with the overall UK trend.
Notably, the level of new business received by private sector companies in Yorkshire & Humber decreased during the latest survey period, marking the first monthly reduction since November last year. Yet, companies in the region remain optimistic about activity growth in the next 12 months, with expectations supported by investment plans, entries into new markets, and upcoming product launches.
Upcoming Economic Data
The release of this growth tracker comes ahead of a week of key economic data, including monthly unemployment and inflation figures scheduled for publication next week. These figures will provide further insight into the broader economic landscape and its impact on regions like Yorkshire and Humber.
