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Economic Development

Yorkshire and Humber firms expect more growth despite fall in business activity

Uncertainty eases for firms across the region and there are signs of optimism

Leeds city centre

Business activity still showed signs of contraction last month, though at a slower pace than previously, new research suggests.

Researchers behind the latest NatWest 海角视频 Regional Growth Tracker say the marginal contraction in May, compared with a challenging April, gave reason for optimism. But the survey found lower intakes of new work for private sector firms in Yorkshire and Humber, who cited delays to projects thanks to uncertainty and weak demand.

The headline Yorkshire & Humber PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – showed a slight contraction at 49.0, but up from 48.1 in April.

Despite power sales performances in May, private firms were slightly more optimistic about growth potential over the next year - though confidence levels were lower than the 海角视频 average. Positive forecasts, strategic changes and investment plans were said to be behind the uptick in sentiment.

Employment levels across the region declined in a continuation of a trend since December last year with non-replacement of voluntary leavers and some redundancies reported by companies. However, the fall in workforce numbers was softer than in April.

Amid weaker demand, firms used May to clear backlogs of work at a the fastest pace in 18 months. Only the North West recorded a steeper decline in outstanding business.

Sebastian Burnside, chief Economist at NatWest, said: "Yorkshire & Humber businesses recorded lower activity levels in May, but the decline was only marginal overall and slower than in April. Weak demand conditions remain a headwind for companies, with heightened uncertainty reportedly holding back client spending and investment.

"That said, Yorkshire & Humber companies are taking a measured approach to get through the current soft patch. Backlogs of work are being reduced, supporting activity levels somewhat and limiting the extent of employment cuts needed. Firms are also raising their prices less aggressively, which could suggest that more companies are negotiating with clients or pro-actively offering support to sales.