NatWest PMI data shows growth cooling but confidence remains high

Private sector output growth in the south east cooled to a three-month low in July, according to the latest data.

The PMI (purchasing managers' index) data from NatWest also revealed a slowdown in new business and employment remaining static.

According to the research, some firms noted a shortage of available skilled staff to replace leavers.

South East Business Activity Index. Source: NatWest, IHS Markit (3554969)
South East Business Activity Index. Source: NatWest, IHS Markit (3554969)

However, overall, firms remained optimistic towards future growth prospects, signalled by business confidence reaching a five-month high.

The NatWest South East Business Activity Index – a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors – was at 53.3 in July, down from 54.6 in June.

But the figure remained above the 50.0 no-change mark and signalled a moderate rise in business activity across the south east's private sector.

Growth at manufacturing businesses outperformed service-providing companies once again in July.

Respondents in the region reported the strongest degree of optimism since February during July.

Stuart Johnstone, managing director, London and south east, corporate and commercial banking at NatWest, said: “The latest survey data signalled a slowdown in growth across the south east’s private sector.

"Capacity pressures continued to bite in July, signalled by another rise in work outstanding, although softer new order growth gave a partial respite.

"Notwithstanding difficulties in hiring new skilled staff and easing growth, confidence among local companies picked up to a five-month high amid planned business investment.”

The NatWest South East PMI is compiled by IHS Markit from responses to questionnaires sent to south east companies.

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