Business activity in the region fell further behind the rest of the UK in May, only just remaining in positive territory.
Latest findings from the NatWest Yorkshire & Humber PMI Business Activity Index put the area at 0.6 percentage points above the break-even line, some 3.4 per cent below the national average. Only Wales recorded a faster fall in new business intake in what was the first contraction in demand since January.
Weaker conditions in the markets key customers operate in reportedly weighed on new order inflows.
Read next: More than 2,000 staff redundant as delivery firm Tuffnells collapses
Malcolm Buchanan, chair of the NatWest North Regional Board, said: “The NatWest Regional PMI data suggests Yorkshire and the Humber faced a challenging period during May. Not only did growth slow to a marginal pace, but compared to its peers, this part of the UK was one of the worst performers. The region saw demand conditions weaken over the course of the month, affecting the rate of growth and impacting business confidence in some sectors.
"The latest report does offer grounds for optimism. Encouragement can be gleaned from sustained employment growth, which suggests that companies are filling vacancies and preparing themselves for future opportunities. Falling inflationary pressures also bodes well, and we've already seen reports of firms making their prices more competitive. That said, underlying data shows that price pressures are driven by services, with firms in these industries reporting higher wage costs. Therefore, the risk of inflation staying stubborn remains elevated for the time being."
The month-on-month change in the combined output of the region’s manufacturing and service sectors dipped to 50.6, from 52.5 in April, although a fifth consecutive month of expansion in staffing was noted.
According to surveyed firms, extra workers were hired to fill vacancies, reduce the strain on existing staff and prepare for future growth. The rate of jobs growth slowed and was modest, but broadly matched that seen for the UK as a whole.
For a third month running, private sector companies recorded a drop in the volume of outstanding work. The pace of decline was solid and unchanged from April's four-month record. According to survey respondents, the catch-up of incomplete orders was enabled by falling intakes of new business.
Another sharp increase in operating expenses was registered by surveyed companies at the midway point in the second quarter, although the rate of inflation eased to a 28-month low.
That being said, trends diverged significantly by sector as a fall in input prices at manufacturers compared with a softer, but still steep rise in costs at service providers. While lower prices for raw materials and energy helped bring factory input costs down, wage pressures were behind the sharp rise in service sector expenses.
The seasonally adjusted Prices Charged Index remained well above the no-change mark of 50.0 in May, though selling prices were raised to the weakest extent since February 2021 as companies, particularly in the manufacturing sector, became more competitive amid falls in their costs and difficulty securing new work.
Read next:
Jobs set to go at Myenergi as growth slows in electric vehicle charge market
Croda forecasts narrower profits for 2023 after record year
Atlas Leisure Homes makes almost 100 redundancies amid 'sector slump' warning
Manufacturing giant Ideal Heating bolsters supply chain support for carbon footprint reductions
All your Humber business news in one place - bookmark it now
