Business activity in Wales has fallen at its quickest pace since February 2021, according to new research from NatWest. Welsh firms reported a “solid contraction” in output and new orders last month amid a fall in new business, the latest Wales PMI survey from the bank showed.
The headline NatWest Wales Business Activity Index – which measures the month-on-month change in the combined output of the manufacturing and service sectors – registered 46.7 in June, down from 49.4 in May. Anything below 50 denotes contraction.
When compared to business activity across the 海角视频 as a whole, Wales recorded the weakest performance of the 12 monitored 海角视频 nations and regions and was the only one to report a fall in business activity.
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Welsh businesses blamed economic uncertainty, hesitancy among customers, and reports of destocking, which weighed on demand, for the sharp fall in output.
Business confidence among Welsh firms slumped to a four-month low, though some businesses were upbeat in their expectations for output over the coming year. Those that were optimistic cited new product launches and hopes that inflation and economic uncertainty would ease.
There was no change in workforce numbers in June as many businesses said weak client demand and a drop in new orders meant that many voluntary leavers were not replaced. Welsh companies were the only ones in the 海角视频 to not see a rise in employment.
The level of outstanding business at Welsh private sector firms fell rapidly at the end of the second quarter - the sharpest fall since May 2020. Low new orders and sufficient capacity reportedly allowed firms to substantially work through their backlogs.
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Operating expenses increased at a marked pace in June with firms linking this to some supply issues for specific inputs. However, the rate of inflation slowed to the weakest since October 2020 as companies reported lower utility and supplier prices.
NatWest Wales regional board Kevin Morgan said: “Welsh firms indicated worsening demand conditions in June, as new orders contracted for the first time since February. The fall in new business led to the sharpest drop in output for over two years, while firms left employment unchanged amid subdued sales and a marked decline in work outstanding.
“Notably, Welsh firms registered the steepest fall in output of the 12 monitored 海角视频 areas. Concerns surrounding the stability of demand weighed on business confidence, which slipped to the lowest for four months.
"At the same time, inflationary pressures softened. Rates of increase in input costs and output charges slowed to the weakest since October 2020 and April 2021, respectively, as moderations in energy and supplier prices were passed through to customers amid efforts to remain competitive."
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