A monthly survey plotting the health of the Yorkshire and Humber business sector has fallen to its lowest level in 18 months.
The NatWest Business Activity Index, which measures the combined output of the region’s manufacturing and service sectors, fell to 51.1 in July - a figure that indicates growth but the weakest score seen since last February.
July survey data signalled the first drop in demand for Yorkshire and Humber goods and services for almost a year-and-a-half, with businesses reporting supply issues, order cancellations, high prices and clients having sufficient stock as reasons for weaker demand.
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Firms also reported higher energy, transport and raw material prices, along with wage pressures, though the region saw one of the lowest rates of cost pressures in the UK.
Richard Topliss, chair of NatWest North regional board, said: “The Yorkshire & Humber private sector registered a notable slowdown in growth at the start of the third quarter as the cost-of-living crisis, subdued client confidence, ongoing supply issues and rapid energy price inflation all weighed on the economy. Overall, July’s expansion was the softest in a year-and-a-half and only mild overall.
“Of concern will be the decline in private sector order books, highlighting the damaging impact that high inflation is having on demand. Confidence in the outlook has deteriorated, with business optimism slumping to its lowest level since the early stages of the Covid-19 pandemic in 2020.
“If any positives are to be gleaned from the latest survey, it could be on the prices front, where input cost and output price inflation cooled further.”
A separate survey last week showed more than 33,000 companies in Yorkshire and Humber were in ‘early stage distress’ as Bank of England forecasts indicated inflation rising even higher than expected and the UK economy likely to go into recession.
Business groups including the CBI and the Federation of Small Businesses have called on the Government and the two Conservative leadership candidates to tackle inflation and other business costs as their main priority.
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