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South West business activity falls for first time since July 2016

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Written by: Hannah Baker | Posted 10 December 2018 16:29

South West business activity falls for first time since July 2016

Business activity in the South West has fallen for the first time since July 2016, according to new research.

The decline coincided with the first reduction in new business for nearly two-and-a-half years, the latest NatWest PMI data report revealed.

Lack of demand had an impact on job creation, while business confidence towards the one-year outlook slipped to a 17-month low.

There was also a sharp rise in input costs for businesses, which prompted companies to raise their charges further.

The headline South West Business Activity Index – a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors – registered below the neutral 50.0 level at 49.1 in November, down from 52.0 in October.

Though only slight, this signalled the first reduction in South West private sector output for 28 months.

Read more: Manufacturing careers fail to appeal to Generation Z

Supply-chain difficulties and Brexit-related uncertainty dampened business confidence midway through the fourth quarter.

Chris Preston, chair of the NatWest South West Regional Board, said: “The latest set of Natwest PMI data for the South West private sector painted a disappointing picture, with both business activity and new orders declining for the first time in over two years.

“Weaker demand conditions and Brexit-related uncertainty meanwhile pushed business confidence down to its lowest level for nearly a year-and-a-half, which translated into only a marginal rise in staffing levels during November.

“A further sharp rise in costs meanwhile led firms to raise their charges again, which may dampen sales further in the coming months unless confidence and activity picks up.” 

Across the UK as a whole, activity rose marginally, with the rate of growth easing to the weakest in the current period of expansion that began in August 2016.

The service sector, in particular, saw a decline in business activity, while manufacturing output continued to expand.

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