Business activity increased in seven of the UK’s 12 nations and regions in August, with Northern Ireland and London recording the strongest performances, according to the latest NatWest Growth Tracker.
The survey also found that business confidence about the year ahead improved in most areas, although companies faced renewed pressure from rising costs.
The NatWest Business Activity Index uses a reading of 50.0 as the dividing line between growth and contraction. A reading above 50 indicates expansion, while a higher figure points to faster growth.
Northern Ireland recorded the strongest result in August, with a reading of 55.5, its highest level in almost two years. London followed with 54.9.
Business activity remained unchanged in the West Midlands, which recorded 50.0. Several other regions reported modest declines. The North West registered 49.7, followed by the North East at 49.6, the East Midlands at 49.5 and Scotland at 48.9.
The August figures marked a slowdown from July, when 10 of the 12 areas recorded growth and London led the rankings with a reading of 55.3.
Sebastian Burnside, NatWest chief economist, said business activity had remained resilient despite renewed inflationary pressures. He also pointed to improving expectations for future output across most parts of the country.
Cost pressures increased across most UK regions during August, although input price inflation remained below the levels recorded during the second quarter. Northern Ireland experienced the sharpest rise in operating costs, followed by Yorkshire and Humber.
Scotland recorded the slowest increase in costs, with inflation reaching its weakest level in six months.
Burnside said higher fuel prices had contributed to faster increases in business costs during August. However, he noted that inflation in both input costs and prices charged by businesses remained below the highs seen earlier in the year.
The Bank of England held its key interest rate at 3.75% at its July meeting. Its next monetary policy decision is scheduled for September 17.
Prices charged for goods and services generally increased at faster rates in August. Northern Ireland recorded the sharpest rise, while price growth was unchanged in London and the South West. The South East recorded its weakest output price inflation in five months.
Demand remained mixed, with six of the 12 areas reporting an increase in new business. London and Yorkshire and Humber recorded the strongest growth in new work.
Employment conditions remained subdued. Scotland recorded a third consecutive month of workforce growth, while the South West saw its first increase since April. Staffing levels declined in several other regions, with Wales experiencing the sharpest fall.
Business expectations for the next 12 months improved across most areas. The West Midlands recorded the highest level of optimism, followed by London and the South East, while confidence remained positive but weakest in Northern Ireland.
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