Confidence among business leaders across Yorkshire and Humber is on the rise thanks to hopes for sales pipeline growth and despite a number of headwinds.
Research in the NatWest Growth Tracker shows that last month, companies across the region were optimistic about the year ahead - particularly in housebuilding and infrastructure development. The monthly survey of business leaders indicated that despite the optimism, business activity had actually reduced, albeit at a slower rate of decline than in January and described as "mild" overall.
Meanwhile the headline Yorkshire & Humber PMI Business Activity Index, which is seasonally adjusted and measures the month-on-month change in combined output of the region's manufacturing and service business, increased to 48.6 last month from 47.7 in January. Firms reported that delays to orders curtailed growth.
Lower employment levels were reported across the region, with the rate of job cuts speeding up slightly and at is fastest since November 2020. Researchers said the decline in workforce numbers was relatively soft compared with other parts of the country.
Order intake declined across Yorkshire and Humber, following a Ƶ trend which was only bucked by the North East and London. The decline across the region was the fastest in 15 months but described as moderate overall.
Lacklustre incoming orders meant the reduction of backlogs continued at a steep rate, though measured at its weakest in three months. However, firms indicated stronger growth expectations in February - outpacing the Ƶ as a whole.
Businesses across Yorkshire and Humber continued to face steep price inflation, though the rate was down slightly on a nine-month high. Prices were raised in response, and at the sharpest pace since June 2023.
Malcolm Buchanan, chair of the NatWest North Regional Board, said: "We continue to see a strong level of optimism across the Yorkshire and Humber private sector. Reasons underpinning confidence include robust sales pipelines and upbeat forecasts regarding the investment outlook, particularly linked to home building and emergent infrastructure relating to renewable and clean energy.
"This implies that the current soft patch in demand will be short-lived, and these positive projections should be conducive to future hiring, which will further support the local economy."
Separate research from insolvency and restructuring trade body R3 showed a 39% increase in insolvency-related activity across Yorkshire and Humber. That followed a Ƶ-wide pattern, excluding Northern Ireland which saw a 38% drop.
Dave Broadbent, chair of R3 in Yorkshire and partner at Begbies Traynor in York and Teesside, said: “With SMEs as ever bearing the brunt, Ƶ business is contending with a multitude of challenges that are threatening stability and growth right now, and so unfortunately both the hike in insolvency-related activity and the disappointing growth in new start-ups come as little surprise.
“We are now witnessing a worrying decline in borrowing as businesses see their peers struggling to manage debt, while concerns are still rife among employers about the Employment Rights Bill and the knock-on costs and complexities that might ensue. In some cases this is putting the brakes on firms investing and creating new jobs.
"The threat, and reality, of trade barriers also continues to loom large, for exporters and supply chains, and of course this is all compounded by the extremely cautious consumer spending that has dampened business activity across multiple sectors and paints a gloomy outlook for coming months.”
