NatWest UK regional PMI report for August 2022

A summary of this month’s Purchasing Managers’ Index reports. August saw more UK regions slip into economic contraction.

Key findings

  • Just three out of 12 regions recorded growth in business activity
  • Employment rose in most areas, albeit with waning momentum
  • Business cost pressures remained high but eased further from recent peaks

Most areas once again saw a rise in employment, though rates of job creation slowed. Although business costs continued to soar, rates of increase did at least moderate further from the recent historical highs.

The PMI Business Activity Index is the first fact-based indicator of regional economic health published each month, tracking the monthly change in the output of goods and services across the private sector. A reading above 50 signals growth, and the further above the 50 level, the faster the expansion signalled.

Just three out of the 12 monitored UK regions recorded a rise in business activity in August, the fewest in over a year and a half. Growth in London was solid but had eased notably since July (index at 54.9), while both the North West (51.8) and Yorkshire and the Humber (51.4) recorded only modest rates of expansion. Activity fell elsewhere, with the steepest declines registered in the North East (43.4) and East of England (43.5).

* PMI survey coverage in Northern Ireland includes construction and retail, as well as manufacturing and services.

Sebastian Burnside, NatWest Chief Economist, commented: “July’s survey had flashed warning signs when it showed inflows of new business falling across most UK regions, and now the latest data for August confirms that this downturn in demand is increasingly weighing on economic activity.

“Just a quarter of UK regions recorded growth in output levels in August, with London seeing the only real noteworthy expansion. However, even in the capital, which led the way in terms of business activity and employment, there were further signs of a loss of momentum as growth slowed and the rate of job creation eased to a 16-month low.

“Employment remained a plus point, rising in all but one of the 12 monitored regions during August. That said, with falling backlogs of work pointing to a let-up in capacity pressures across the economy, and business confidence generally declining, firms everywhere showed greater caution on the hiring front.

“A broad-based fall in input price inflation was welcome news, but cost pressures facing firms nevertheless remain extremely high, and there’s still a lot of uncertainty around the energy situation as we head into autumn.”

Please see the regional reports in full:

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