News / Business
Decline in business activity across South West
Sharply rising costs and fears the economy is plunging into recession have been blamed for a decline in business activity across the South West.
Private sector companies experienced a steady fall in output amid a steeper reduction in new orders, with lower sales linked to continued uncertainty and subsequent cuts to client spending, according to the latest NatWest report.
The South West PMI Business Activity Index, which measures the month-on-month change in the combined output of the region’s manufacturing and service sectors, fell from 51.3 in July to 46.2 in August this year.
The results signal the first drop in business activity across the region for a year and a half – with the rate of decline in the South West the quickest since January 2021 and “solid”, in contrast with only a fractional drop nationally.
Sharply rising costs and fears the economy is plunging into recession have been blamed for a decline in business activity across the South West – image: NatWest
Commenting on the latest research, Paul Edwards, the chair of the NatWest South West Regional Board, said: “South West private sector firms registered a renewed fall in business activity during August as sales dropped for the second month in a row.
“Firms often blamed the weaker business environment on sharply rising costs and fears that the economy is sliding into a recession, which has led clients to cut back on spending.
“As a result, employment growth near-stalled in August amid signs of spare capacity, while confidence around the outlook fell to its lowest on record.
“Underlying inflationary pressure reduced in August, but with energy prices continuing to rise this is a continued and growing source of concern for most businesses and the reason why we are working to support them through this difficult time.”
Adjusted for seasonal variation, the employment index indicated a notable slowdown in the rate of job creation across the South West private sector in August. In addition, employment rose at a marginal pace that was the weakest seen for 18 months.
While findings suggest company bosses in the region are remaining upbeat about the 12-month output outlook, the degree of positive sentiment slipped once more to the lowest seen since the index was launched ten years ago.
Main photo: Josh Rundle
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