Business activity increased across 10 of the UK’s 12 nations and regions in July as inflationary pressures subsided and confidence improved, according to NatWest.
The latest NatWest UK Regional Growth Tracker indicated a broader expansion at the start of the third quarter, with the number of areas reporting growth rising from three in June.
London remained at the top of the rankings, recording a Business Activity Index reading of 55.3. It was followed by the South East at 53.2 and Northern Ireland at 51.4.
The index measures changes in business activity, with any reading above 50.0 indicating growth. A higher reading signals a faster rate of expansion.
Scotland, with a reading of 47.3, and Yorkshire and the Humber, at 49.1, were the only areas to report a fall in output.
Cost pressures eased in every nation and region monitored by the survey, generally resulting in slower increases in the prices charged for goods and services. Growth expectations also recovered across most parts of the UK.
Sebastian Burnside, NatWest chief economist, says: “Most areas of the UK enjoyed a positive start to the third quarter, seeing output levels rise as price pressures eased further from their recent highs.
“Business activity growth widened to encompass all but two of the 12 UK nations and regions monitored in July, supported in most cases by improved trends in underlying demand.
“Moreover, firms in most areas were increasingly upbeat about the outlook, raising the prospect of stronger growth in the second half of the year.
“Rates of increase in business costs fell sharply across the board, which reduces the upside risks to headline inflation and thereby the chances of an increase in interest rates in the coming months.
“Adding to the positive news, there were further signs that labour market conditions are beginning to stabilise, with July seeing workforce numbers fall at slower rates in most cases and even rise in some parts.”
