BUSINESS NEWS
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South West Business Activity Index sa ,> 50 = growth since previous month
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SOUTH WEST BUSINESS ACTIVITY STABILISES IN Q4
As 2023 comes to a close , statistics suggest that business confidence is on the up as we approach the New Year .
The headline NatWest SouthWest PMI ® Business Activity Index – a seasonally adjusted index that measures the monthon-month change in the combined output of the region ’ s manufacturing and service sectors – posted broadly in line with the neutral 50.0 level at 50.1 in October . This was up from 47.8 in September and signalled broadly stable levels of business activity across the region following a four-month period of decline . In contrast , output continued to decline modestly across the UK as a whole at the start of the final quarter of 2023 .
The overall amount of new work placed with South West private sector firms fell only slightly at the start of the final quarter of 2023 . Notably , the rate of reduction was the weakest recorded over the current five-month sequence of contraction . While some companies noted that efforts to win new business had borne fruit , others indicated that a general slowdown in market conditions had weighed on overall client demand . Across the UK as a whole , new orders fell for the fourth straight month , albeit modestly .
The Future Activity Index continued to signal optimism among South West private sector firms when assessing the 12-month outlook for output in October .
The level of positive sentiment picked up from September ’ s nine-month low and was slightly above the series average . Upbeat forecasts were generally underpinned by hopes that customer demand will revive and boost sales . Planned company expansions were also mentioned by some firms .
While business confidence softened slightly at the national level , it was in line with that recorded in the South West .
Private sector firms based in the South West lowered their staffing levels for the second successive month in October . Anecdotal evidence linked the latest decline in payrolls to softer demand conditions and the non-replacement of voluntary leavers . The rate of job shedding eased to a modest pace , however , and was similar to that seen across the UK as a whole .
Outstanding business at South West private sector businesses fell again in October , thereby stretching the current sequence of depletion to eight months . That said , the pace of reduction was the softest since April . Moreover , of all 12 UK regions , only London recorded a softer decrease in backlogs than the South West in the latest survey period . Where lower amounts of unfinished work were reported , firms often attributed this to reduced inflows of incoming new work .
Latest survey data pointed to a further easing of cost pressures across the South West private sector during October . Though sharp , the rate of input price inflation was the softest recorded since January 2021 . A wide range of factors were mentioned as having increased in cost , including wages , raw materials , fuel and energy . A slower , but still marked rise in operating expenses was also seen across the UK as a whole .
The seasonally adjusted Prices Charged Index posted above the neutral 50.0 level in October to signal a further rise in selling prices across the South West . The rate of inflation quickened slightly on the month and remained historically sharp . That said , the increase was the second-slowest seen over the past two-and-a-half years . While a number of monitored firms mentioned raising their prices due to higher operating costs , others mentioned that overall pricing power was limited due to competitive market pressures .
Paul Edwards , Chair of the NatWest South West Regional Board , said , “ The latest PMI survey brought some encouraging signs that business conditions steadied across the South West at the start of the fourth quarter . Firms registered stable activity following four months of decline , and new business fell at the softest rate in five months . Combined with indications that overall cost pressures are easing , this helped to boost business confidence around the 12-month outlook for output . Nevertheless , both input costs and selling prices continued to increase at elevated rates as companies reported further hikes in staff , raw material and energy costs . There are still signs of spare capacity in the sector too , with backlogs of work declining again , which contributed to a modest drop in employment .
“ Overall , the more stable picture is a positive development , but firmer demand conditions and a sustained improvement in sales will be needed to put the sector on a solid growth footing .” Sources : NatWest , S & P Global PMI .
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