Business activity in the South West has continued to grow “modestly”, as some firms were impacted by staff shortages or lower than anticipated sales, according to a new NatWest report.
The bank’s South West PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors - signalled its second successive monthly increase in activity across the region, following its first rise for seven months.
Bosses told researchers a sustained uptick in new business was linked to improved client confidence and spending. Overall confidence among companies hit a 13-month high, with NatWest saying respondents reclaimed “highly upbeat” that output would rise further over the coming months.
The study also suggested the pressures of inflated costs were easing on private sector firms. Though sharp and well above the historical average, the latest increase in input costs, for energy bills and supplier prices, was the softest seen in almost two years. While firms reported passing on higher operating costs to customers through pricing, NatWest said the rate of charge inflation was also the slowest seen in 23 months.
After expanding for the first time in three months in February, employment across the South West private sector fell back into decline in March. The rate of job shedding was marginal, however, and weaker than those seen at the turn of the year. NatWest said firms that registered lower payrolls often linked this to not replacing voluntary leavers.
Paul Edwards, chair of NatWest’s South West regional board, said: “It was encouraging to note that companies widely anticipate headwinds to recede and economic conditions to strengthen in the months ahead, which helped to push up business confidence to a 13-month high. Although still sharp by historical standards, increases in input costs and selling prices eased, adding to hopes that the worst of the cost-of-living crisis and supplier price hikes are over."
Read next:
- South West recruitment issues as firms say rising wages drive up prices
- Bristol-based finance firm reports growth in SME lending
- Superdry plans £35m cuts as cost-of-living crisis impacts sales
- Tobacco giant Imperial Brands on track for ‘similar’ results after Russia exit
Like this story? Why not sign up to get the latest South West business news straight to your inbox.
