Latest NatWest Regional PMI data showed a slowdown in growth of business activity and inflows of new work across most parts of the UK at the start of the second quarter. Rampant price pressures acted as a headwind to demand, with businesses in nearly all regions indicating a record rise in average charges for goods and services in April as they looked to offset soaring costs.
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.
In terms of business activity, April saw a general loss of momentum across the UK, with nine regions recording slower growth and the North East (index at 48.3) seeing a renewed contraction. London (61.3) recorded the fastest overall rate of expansion, followed by the South West (60.3), though only Scotland (58.9 from 58.4) and the North West (58.7 from 56.9) registered quicker increases in business activity than the month before.
Sebastian Burnside, NatWest Chief Economist, commented:
"Most areas of the UK are experiencing a loss of growth momentum, with the post-lockdown rebound in activity losing steam and demand starting to creek under the pressure from ever-increasing prices.
"Latest Regional PMI data showed slower increases in business activity in ten of the 12 areas monitored by the survey, with many seeing an even sharper slowdown in new business growth.
"Soaring costs are a key challenge for businesses, a growing number of which are resorting to hiking their own prices to protect profit margins. Almost every region saw a record rise in average prices charges for goods and services, which will ultimately put even greater pressure on household budgets in the coming months.
"Higher employment remained a bright spot for most regions in April, with only the North East seeing a fall in workforce numbers during the month. However, rates of job creation generally slowed in April, with business confidence having been hit in recent months by the events in Ukraine and soaring prices."
