NatWest Growth Tracker South West: Strongest upturn in demand in over two years
The South West has seen the strongest upturn in new orders since early 2022, with renewed job creation and a marked expansion in output.
According to the NatWest Regional Growth Tracker report for the South West, business confidence improved to its highest level in nearly three years. Price trends were mixed as a softer rise in input costs compared with the fastest increase in selling prices for a year.
Rising from 53.9 in June to 54.7 in July, the headline South West Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – showed a marked rate of expansion that was the quickest since May 2022. Firms attributed growth to new business gains and demand resilience, as well as the release of pending projects and budget approvals at clients.
July's rise in new orders was the fastest for 28 months. The sharp rate of expansion far outpaced the long-run series average. Local firms identified demand buoyancy, successful advertising and investment as the main determinants of sales growth.
Private sector companies in the South West indicated another monthly increase in their operating expenses during July. According to them, insurance premiums, labour, metal, paper and transportation costs rose since June. The rate of inflation, although still sharp, eased to the weakest in six months.
Ongoing increases in input costs underpinned a further upturn in prices charged for South West goods and services. The rise was sharp and the most pronounced in a year.
Paul Edwards, Chair of the NatWest South West Regional Board, said:Â "Â The South West emerged as the leader of an almost broad-based increase in new business across the 12 monitored UK regions and nations, saving a fall in the East Midlands. Demand strength boosted local output growth, underpinned a renewed rise in employment and pushed business sentiment to a near three-year high. While cost inflation receded in July, there was a faster increase in selling prices as companies aimed to catch up with significant increases in operating expenses in recent years. Overall, the latest results indicate promising prospects for the region in the near term, as firms seem to have the necessary resources to meet growing workloads."
