NatWest Launches Seasonal PMI Report on South West Business

NatWest has unveiled its latest South West PMI® Business Activity Index, offering valuable insights into the region’s economic landscape. The report measures the month-on-month changes in the combined output of the manufacturing and service sectors, revealing both challenges and optimism.

In August, the South West PMI® Business Activity Index fell to 46.7 from July’s 49.8. This marks the third consecutive month of declining business activity in the region, with the latest reduction being the steepest since November of the previous year. The UK as a whole also witnessed a decline in business activity during August, although at a more modest rate.

One significant factor contributing to the downturn in the South West was the decline in new work received by private sector companies. August marked the third consecutive month of contraction, with the rate of decline being the sharpest since November. Weaker economic conditions and higher interest rates were reported as factors driving clients to adopt a more cautious approach to spending.

Despite these challenges, South West private sector firms remained cautiously optimistic about the 12-month outlook for business activity. In August, the degree of positive sentiment reached its highest point in five months, surpassing the UK-wide average. Companies attributed their optimism to hopes of strengthening economic conditions, increased consumer confidence, and new marketing strategies and investments.

On the employment front, August saw a further increase in jobs across the South West private sector, albeit at a slower pace. Higher headcounts were often associated with new projects and preparations for future growth. Nationwide, staffing levels also expanded but at a slower pace than in the South West.

Outstanding workloads at private sector companies in the South West continued to decline, with the rate of depletion accelerating. A lack of new orders was cited as a key factor behind this decline. Nationally, unfinished work also fell, although at a slower rate than in the South West.

Inflation remains a concern, with the Input Prices Index indicating sustained cost burdens for South West private sector firms. The rate of inflation increased to its sharpest level since February, surpassing the UK-wide trend. Higher costs were partially passed on to clients through increased selling prices in August, with South West private sector companies leading the way.

NatWest’s South West PMI® report highlights the challenges and opportunities facing the region’s business landscape. The decline in business activity and rising costs raise concerns, but optimism regarding future prospects and the resilience of the workforce demonstrate the South West’s determination to weather the current economic headwinds.

Main photo: Natwest

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