NatWest has reported that business activity increased in 10 of the 12 UK nations and regions in July, a significant rise from just three in June, according to its latest Growth Tracker survey. The bank, which has branches in Birmingham, said cost pressures eased across all areas, leading to generally slower price rises for goods and services.
The headline Business Activity Index, where readings above 50.0 signal growth, showed London topping the rankings with an index reading of 55.3, followed by 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.
Positive Start to Third Quarter
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." He added that business activity growth widened to encompass all but two of the 12 monitored regions, supported in most cases by improved trends in underlying demand.
Growth expectations also recovered further across most parts of the UK, raising the prospect of stronger growth in the second half of the year, according to the survey.
Cost Pressures and Inflation Outlook
The survey highlighted that rates of increase in business costs fell sharply across the board. Burnside noted this "reduces the upside risks to headline inflation and thereby the chances of an increase in interest rates in the coming months."
July also saw further signs that labour market conditions are beginning to stabilise, with workforce numbers falling at slower rates in most cases and even rising in some parts.
Regional Variations
While most regions saw growth, the North-South divide remained evident. London's 55.3 reading was the highest, while Scotland and Yorkshire & Humber lagged behind. The survey's findings suggest that the UK's economic recovery is broadening but remains uneven across different areas.
The full list of regional performance showed the South East at 53.2 and Northern Ireland at 51.4, indicating moderate growth, while other regions not specified in the report also recorded increases above the 50.0 threshold.
