Yorkshire and Humber Business Optimism Hits 15-Month High as Activity Nears Growth
A recent survey from NatWest indicates that business optimism in the Yorkshire and Humber region has soared to its highest level in 15 months, with economic activity approaching growth territory. The findings highlight a positive shift in sentiment among local firms, driven by factors such as new product launches and optimistic sales forecasts.
Survey Details and Economic Indicators
The NatWest Regional Growth Tracker, which monitors monthly changes in the region's manufacturing and service sectors, recorded a reading of 49.3 in January. This marks a second consecutive monthly increase, though it remains just below the 50.0 threshold that signifies no change. According to the survey, private sector companies in Yorkshire and Humber have experienced back-to-back months of new business growth.
Firms participating in the survey cited several reasons for their upbeat outlook, including:
- New product launches
- Positive sales projections
- Planned investment activities
- Supportive economic conditions
These factors contribute to a promising environment for business expansion and economic recovery in the region.
Challenges in the Labour Market
Despite the rising optimism, the survey reveals ongoing challenges in the local labour market. Payroll numbers in Yorkshire and Humber fell for the 14th consecutive month in January, with only Wales experiencing a sharper decline in job numbers across all UK regions. This trend underscores a hesitancy among firms to increase their workforce, even as business prospects improve.
Malcolm Buchanan, chair of the NatWest regional board, commented on the situation: "Sustained growth in demand for Yorkshire & Humber goods and services and a strengthening of firms' year-ahead expectations for activity serve as promising leading indicators for the region's economy. A softening of cost pressures, in tandem with stronger increases in prices charged, also bodes well from a margins perspective, implying a diminished strain on earnings."
He added: "However, the local labour market continues to be challenged by a hesitancy among firms to grow their workforces. Payroll numbers fell for a 14th straight month in January, and at a rate that outpaced the UK-wide average. However, the more upbeat business outlook could spur hiring, as firms look to achieve their more bullish growth forecasts for 2026."
Broader Economic Context
The release of this survey coincides with upcoming data from the Office for National Statistics (ONS), expected to show modest economic growth in the UK for the final quarter of 2025. Economists predict that the economy grew by 0.1% in this period, following similar growth in the third quarter. This broader context of national economic resilience may further bolster confidence in regional markets like Yorkshire and Humber.
As businesses in the region navigate a complex landscape of optimism and labour market constraints, the coming months will be critical in determining whether improved sentiment translates into tangible job creation and sustained economic expansion.
