NatWest UK regional PMI report for January 2023

Difficult start to the year for most regions, but confidence towards the outlook grows

Key findings

  • Business activity falls in all nations and regions bar London
  • Expectations towards future activity improve across the board
  • Rates of cost inflation continue to ease in most areas

More positively, there was an increase in the number of areas reporting higher employment, amid a broad-based improvement in firms' expectations for the year ahead.    

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. 

London was alone among the 12 UK regions monitored by the survey in recording higher activity in January. The rate of growth in the capital was only marginal, however (index at 50.5 from 50.2 in December). There were renewed downturns in output in both Wales (47.7 from 52.0) and the North West (47.2 from 50.0), while the steepest decrease in activity was once again recorded in Northern Ireland* (45.3).

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

Sebastian Burnside, NatWest Chief Economist, commented:

"It was a challenging start to the year for firms across the UK, with business activity falling almost universally on a regional basis in January. London was alone in recording an increase in output but only managed to eke out marginal growth, as demand for goods and services remained strained by a combination of high inflation, rising interest rates and customer hesitancy.”

"However, the new year did bring increased optimism among businesses, who have seemingly been buoyed by a steady easing of cost pressures and greater calm in energy markets. January data showed that firms across the UK were more confident about their growth prospects in the coming year, hinting that any recession could be shallowed that first feared.”

"Increased optimism among businesses was reflected in a greater number of areas seeing a rise employment in January. Though it has to be said that firms' willingness to take on staff isn't anywhere near the level it was at a year ago.”

"On the price front, the data point to a degree of stickiness in core inflationary pressures, with most nations and regions not only seeing average prices charged for goods and services continuing to rise sharply by historical standards, but also at slightly faster rates than in December."

Please see the regional reports in full:

UK National

North East

North West

Yorkshire and the Humber

East Midlands

West Midlands

East of England


South East

South West 



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