PRIVATE-sector output in Wales has deteriorated, shows latest research from NatWest Bank.
Its Wales business activity index registered 47.7 in September, down from 48.1 in August. Anything below 50 denotes contraction.
The pace of decline was faster than the UK average and the fastest seen in Wales since February 2021. Lower business activity was often linked to supply chain issues and weak client demand. The drop in output was broad based, with manufacturers recording a slightly sharper downturn.
Read more: The story of Wales’ own oil company and plans to go green
New business across the Welsh private sector continued to decline during the month – the sharpest since the start of 2021.
The fall was also faster than the UK average. Anecdotal evidence suggested that lower new order inflows stemmed from weak client demand and a reduction in new inquiries.
At the sector level, service providers registered a sharper fall than their manufacturing counterparts. Expectations regarding the outlook for output over the coming year were muted. Although the degree of confidence picked up from August’s recent low, it was among the weakest since March 2020.
Firms did record a further upturn in employment at the end of the third quarter. The rise in workforce numbers was linked to the filling of long-held vacancies.
Average cost burdens faced by Welsh private-sector companies increased further in September. The rate of cost inflation quickened to the fastest for three months and was marked overall. Higher input costs stemmed from greater energy, material and fuel prices, with a weak pound compounding price hikes.
The rate of increase at Welsh firms was the sharpest of the 12 monitored UK areas.
The rate of inflation was broadly in line with that seen in August and the fastest of the 12 monitored UK areas. Higher output charges were linked to the pass-through of greater cost burdens to customers. The pace of increase was softer than earlier in the year, however, as firms noted increased competition and reduced purchasing power at clients.
Gemma Casey, NatWest ecosystem manager for Wales, said: “September data signalled ongoing challenges for Welsh manufacturers and service providers, as client demand weakened further and output fell. Strain on customer purchasing power worsened amid hikes in inflation and energy costs, with new orders falling at the fastest pace since the start of 2021.”
Read more:
The Swansea cleaning entrepreneur who now runs a multi-million pound business
- RWE and Marine Power Systems partner for Celtic Sea offshore wind opportunities
Housebuilders agree to remediate buildings with fire safety issues in Wales
- The click-and-collect economy worth more than £1bn in Wales
Welsh retail sees much-needed boost as footfall returns to high street
