Southwest business activity falls for first time in 18 months

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Southwest business activity falls for first time in 18 months

Southwest business activity fell for the first time in 18 months, according to a seasonally adjusted index that measures changes in output in the manufacturing and services sectors.

The headline NatWest South West PMI Business Activity Index rated August activity at 46.2. This is down from 51.3 in July and below the no significant change threshold of 50.0.

Index readings showed the lowest business activity in a year and a half across the region and were generally strong.

There was also a new decline in output at the national level, but the rate of decline was negligible.

Private companies operating in the Southwest show that overall new work fell for the second month in a row in August.

Firms that recorded declining sales often associated this with uncertainty about the economic outlook and subsequent reductions in customer spending.

The rate of decline is the fastest and strongest since January 2021. This contrasts with a slight decline in new business across the UK.

The Future Activity Index showed Southwest private sector firms generally optimistic about the production outlook for the August 12-month.

That said, favorability fell for the fourth month in a row, and was the lowest level since the series began ten years ago. Optimism also remained significantly weaker than trends across the UK.

The company’s ongoing expansion plans, increased investment and expectations of increased customer demand were expected to support growth next year, but a slowing economy and rising costs could dampen the outlook. There was concern.

The seasonally adjusted employment index shows that job creation rates fell significantly across the southwest private sector in August. Moreover, employment rose at its weakest pace since the current expansion began 18 months before him.

While some companies have hired additional workers to help expand production capacity, others have found it difficult to replace voluntarily retired workers and are trying to keep costs down. said that they are doing Of the 12 UK regions monitored, only the North East saw his performance worse in August, with fewer employees.

The latest survey data shows a sharp and accelerating decline in unpaid business for private companies in the Southwest in August.

Notably, the backlog depletion rate was the fastest recorded since June 2020 and the second steepest among all 12 UK regions (behind the North East). Companies with a low amount of unfinished work often attribute this to a low influx of new orders.

Average operating costs faced by private businesses in the Southwest rose for the 27th straight month in August. Although rapid overall, inflation fell to his 15-month low, not as steep as seen at the national level. Rising costs of fuel, energy, wages and raw materials were all mentioned by panelists during the latest survey period.

As with January 2021 and beyond, private companies in the Southwest increased their output charges in August. Inflation has dropped to his lowest level in six months, but he’s still one of the fastest in the history of the series.

Reports from panel members frequently referred to the partial passing on of additional costs to clients in the form of higher selling prices. was faster than the Southwest.

Key Findings:

New orders drop sharply while production volume drops sharply

Job growth slows for the first time in a year and a half

Inflationary pressures have eased but remain significant overall

NatWest South West Regional Committee Chair Paul Edwards said: Businesses often cite the worsening business environment as soaring costs and fears that the economy is in recession, causing customers to cut back on spending.

“As a result, employment growth nearly stalled in August amid signs of excess capacity and confidence in the outlook plunged to record lows. Underlying inflationary pressures eased in August, but energy prices rose.” This is an ongoing and growing source of concern for many businesses, and why we are working to get them through this difficult time.”