Business activity rose in 10 of the UK’s 12 nations and regions in July, up from just three in June, according to the latest NatWest UK Regional Growth Tracker.
The survey, compiled by S&P Global from responses to its UK PMI surveys, attributed the improvement to reduced cost pressures and a general pick-up in business confidence at the start of the third quarter.
The Tracker’s headline measure is the Business Activity Index, where any reading above 50.0 signals growth and higher readings indicate faster expansion.
London topped the rankings in July with a reading of 55.3, ahead of the South East on 53.2 and Northern Ireland on 51.4. Scotland, at 47.3, and Yorkshire & Humber, at 49.1, were the only areas to record decreases in output.
The July figures mark a step change from June, when growth was confined to London (54.1), the South East (50.9) and the North East (50.8), and Northern Ireland posted the sharpest fall in output at 43.9.
Cost pressures eased in all 12 areas in July, the survey found, leading to generally slower rises in prices charged for goods and services. Growth expectations for the year ahead also recovered further across most parts of the UK.
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.
“Business activity growth widened to encompass all but two of the 12 UK nations and regions monitored in July, supported in most cases by improved trends in underlying demand. Moreover, firms in most areas were increasingly upbeat about the outlook, raising the prospect of stronger growth in the second half of the year.
“Rates of increase in business costs fell sharply across the board, which reduces the upside risks to headline inflation and thereby the chances of an increase in interest rates in the coming months.
“Adding to the positive news, there were further signs that labour market conditions are beginning to stabilise, with July seeing workforce numbers fall at slower rates in most cases and even rise in some parts.”
The Bank of England held Bank Rate at 3.75 per cent at its meeting on 30 July, with the Monetary Policy Committee’s next decision due on 17 September. Expectations for rate cuts this year have shifted repeatedly as energy prices and inflation forecasts moved in response to the Middle East conflict.
The Tracker’s findings on sentiment follow separate survey data showing UK business confidence at a nine-month high as trade tensions eased.
On the labour market, the survey’s signal of slower falls in workforce numbers comes after recruitment industry data pointed to a slowing decline in UK job vacancies, led by growth in the services sector.
The NatWest UK Regional Growth Tracker covers 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 with the previous month.
