Bristol Business Activity Contracts Amid Drop in New Orders

In the heart of Bristol, our local businesses have been facing challenging times as business activity continues to contract for the fourth consecutive month, according to the latest NatWest South West PMI® Business Activity Index. While the contraction in September was modest, it underscores the hurdles that the region’s private sector is currently navigating.

Key Findings:

1. Business Activity and Sales Decline: Business activity and sales have fallen for four straight months, painting a sobering picture of the local economic landscape. In September, the NatWest South West PMI® Business Activity Index rose slightly from August’s low but remained in contraction territory, standing at 47.8.

2. Decline in New Orders: Private sector companies in the South West have faced a reduction in new business for the past four months. The decline, though not as severe as in August, was still significant. Tighter budgets, inflation, and reduced confidence were cited as factors affecting customer spending. The situation mirrors a nationwide trend of declining new orders, albeit at a slower pace compared to the South West.

3. Diminished Optimism: While South West businesses foresee future growth, the level of optimism weakened in September, marking the lowest point in 2023. Concerns loom regarding tighter financial conditions and potential impacts on client expenditures. Nevertheless, some firms hold hope for improved economic conditions, driven by investments in technology and marketing.

4. Workforce Reduction: After five consecutive months of rising employment, South West private sector firms saw a modest decline in workforce numbers in September. The rate of job shedding was the quickest since December 2022, attributed to non-replacement of voluntary leavers and cost control measures.

5. Backlogs of Work: Backlogs of work continued to diminish sharply in September. Despite a slight easing from the previous month, the rate of depletion remained steeper than the UK average. Fewer new orders and improved supply chain performance were identified as contributing factors.

6. Inflation and Prices: The South West private sector experienced an increase in input prices, driven by higher fuel, energy, and staff expenses. Though the rate of inflation eased slightly, it remained above historical norms. Businesses adjusted by raising their selling prices, although this increase was the softest in 31 months.

Paul Edwards, Chair of the NatWest South West Regional Board, expressed concern over the challenging market conditions. High interest rates, rising living costs, and economic uncertainty have weighed on consumer spending and confidence.

As Bristol-based businesses strive to adapt to these challenges, there’s hope that the resilient spirit of the city will shine through. The region’s ability to weather economic storms and adapt to changing circumstances has been a hallmark of its success, and it will continue to drive our local businesses toward brighter days ahead.

Main photo: Pixabay

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