Activity contracts across three-quarters of UK regions — but London remains ‘bright spot’
London remained one of the few bright sparks in the UK last month, as business activity contracted across much of the rest of the UK.
According to the Natwest regional PMI, just three of the UK’s 12 regions and nations saw output grow in October.
London remained the UK’s top-performing region, with the business activity index coming in at 53.8. The 50-mark separates growth from contraction.
Activity also expanded slightly in the West Midlands and the South West.
“London remains the main bright spot, having seen activity not only grow in October but also at a solid rate,” Sebastian Burnside, Natwest chief economist commented.
“Businesses in the capital are reporting robust customer demand, which contrasts with the situation in almost every other area.”
Across the country as a whole, however, the activity index slipped into contraction at 48.7. Activity contracted fastest in the North East and Wales.
The UK economy has ground to a standstill under the impact of the Bank of England’s monetary tightening. Although figures released last week confirmed the UK will avoid falling into a recession this year, forecasts for next year show little signs that things will get any better.
Although the survey showed that business costs increased more slowly in October than in September, prices charged increased across all monitored regions.
The strongest increase “by far” was in London, the survey said.
“There is some stickiness in inflationary pressures, driven by ongoing wage increases and the recent resurgence in fuel prices,” Burnside said.
Although seven of the 12 regions saw employment fall, this was down from ten in September while the rate of job shedding eased.
A separate survey from Accenture and S&P showed that outlook expectations for UK businesses fell to the lowest level this year. This was due to concerns over the effect of higher interest rates on consumer spending and borrowing.
“It’s no surprise that corporate confidence has wavered in the face of ongoing change, with wider economic challenges impacting interest rates and high prices putting a dent in consumer spending,” Ewan Mackay, strategy and consulting lead at Accenture in the UK & Ireland said.