The Yorkshire and Humber private sector is close to a return to growth after a stabilisation of new orders during July, according to the latest NatWest Regional Growth Tracker. The index, which measures the output of the region’s manufacturing and service sectors, rose to 49.1 in July from 45.5 in June. A score above 50 indicates economic expansion, while below 50 signals contraction.
New orders stabilise amid subdued customer confidence
The survey found that new orders were little changed in Yorkshire and Humber during July, with a number of respondents indicating that customer confidence remained subdued amid market uncertainty. This followed a period of decline in new orders, which had been affected by geopolitical issues. The stabilisation in demand contributed to softer reductions in output and employment levels as the second half of the year began.
Employment in the region continued to fall, with non-replacement of departing staff as part of efforts to limit costs. This marked 20 consecutive months of decreases in the regional workforce, according to the survey.
Input costs rise but inflation cools
Companies reported sharp rises in input costs, particularly for fuel oil and raw materials. However, the rate of inflation slowed markedly from the previous month, providing some relief to businesses. The survey noted that inflationary pressures cooled, which helped alleviate some of the headwinds facing firms.
Business confidence cautiously optimistic
Business confidence in Yorkshire and Humber fell slightly in July amid ongoing uncertainty and worries about geopolitics. Despite this, firms in the region were broadly optimistic overall about prospects for the coming year, which was reflected in investment plans, the survey found.
Malcolm Buchanan, chair of the NatWest North regional board, said: “There were some encouraging signs from the latest Yorkshire and Humber Growth Tracker, particularly with regards to customer demand which stabilised following a period of decline amid geopolitical issues. Although still muted, the inflow of new orders was such that firms posted softer reductions in output and employment levels as the second half of the year began. Adding to the alleviation of headwinds facing firms, inflationary pressures also cooled.”
He added: “While conditions looked to be moving positively in July, firms remained only cautiously optimistic regarding the future as geopolitics continues to loom over the global economy and has the potential to throw the nascent recovery off course.”
