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Record drop in South West business activity
Lockdown measures underpinned the most severe drop in business activity across the South West ever recorded in the history of the NatWest PMI survey.
The firm, which has been collating data for more than two decades, says the temporary closures of companies has led to a record fall in staffing levels and a dramatic decline in new orders, with 88 per cent of respondents reporting lower sales.
The region’s business activity index measures the combined output of the region’s manufacturing and service sectors. It saw a sharp drop from 36.7 in March 2020 to just 12.9 in April, signalling the most severe decline in private sector output since the survey started in January 1997.
Data also showed the decline for companies in the South West was slightly quicker than the UK private sector average.
The bleak economic outlook comes as business leaders in Bristol welcome the glimmer of hope offered to companies by Boris Johnson’s phased plan for releasing lockdown measures but raise concerns about lack of clarity around how this should be implemented.
Phil Smith, the managing director of Business West, said: “We welcome his encouragement for people to return to work if they cannot properly do their jobs from home, but of course, they must be able to do that in safety.
“Business is concerned about the lack of clarity in the “rules” for this return to work. If this remains confused both employers and employees might decide for themselves that returning to work is too much of a risk.”
Data from NatWest’s PMI Survey shows a dramatic drop in business activity due to lockdown measures. Source: NatWest
According to NatWest’s findings, sentiment regarding output over the next year improved only slightly from a record low in March.
While firms in the South West were generally more optimistic than the average UK business, worries persisted about how long any public health measures will remain in place and how severe these will be.
The chair of NatWest’s South West Regional Board, Paul Edwards, said: “With the COVID-19 pandemic and strict lockdown measures bringing vast swathes of the economy to a standstill, the latest NatWest PMI data has shown unprecedented decreases in business activity across each and every part of the UK in April.
“The South West has seen a greater fall in both output and new orders than the average UK, with tourism and other consumer-facing sectors particularly hard hit amid social distancing and restrictions on movement.
“South West firms remain apprehensive about the outlook and are faced with tough decisions about how best to navigate the challenges over months ahead. Despite widespread uptake of the government furlough scheme, April has still seen many redundancies and, without a swift recovery, unfortunately there could be more to come.”
Main photo of businesses closed in Kingswood – by Ellie Pipe
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