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Birmingham Post
Birmingham Post
Business
Andrew Arthur

South West business activity highest in almost a year, NatWest study finds

Business activity in the South West has reached the highest level in almost a year, as cost pressures continued to ease on firms, 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 a third successive monthly expansion of output across the region.

NatWest said the upturn was supported by the quickest increase in new work for nearly a year, which prompted firms to expand their staffing levels “at a solid pace”.

Read more: Almost two thirds of South West business leaders think Brexit has boosted ‘brand Britain’, study finds

The research found average input prices rose at the softest pace seen in more than two years. Nevertheless, higher costs drove another steep rise in selling prices.

Bosses at South West firms reported an increase in overall new business during April, with the rate of growth the best seen for nearly a year. Companies that registered greater amounts of new work often linked this to firmer demand conditions, new product releases and improved marketing

After improving to a 13-month high in March, NatWest said business confidence in the region, around the one-year outlook for output, softened last month. The overall degree of positive sentiment slipped to a four-month low and was weaker than the UK average.

Companies that were optimistic that activity would rise told researchers they were hoping that economic conditions would improve, and client numbers would increase. However, some firms highlighted lingering economic uncertainty, with rising costs and interest rates dampening growth prospects.

The study also found the second increase in employment within the South West private sector within the past three months, while the rate of job creation was the steepest seen since June 2022 - and quicker than the national level.

Paul Edwards, chair of NatWest’s South West regional board, said: "Private sector companies across the South West had an encouraging start to the second quarter, with firms reporting the steepest increases in output and new orders for nearly a year. Efforts to expand capacity meanwhile drove a renewed upturn in employment, and one that was solid overall. Firms have also reported a further easing in the rate of cost inflation, which dipped to its lowest in more than two years.

“However, concerns over lingering economic uncertainty, higher interest rates and the ongoing squeeze on clients' budgets dampened business confidence slightly in April. Furthermore, despite cost inflation moderating, average selling prices increased at a slightly faster pace as firms looked to protect their operating margins."

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