New business data has pointed to softer declines in both output and new orders in October in the South West, while employment increased for the first time since June.
Business sentiment also improved, reaching a six-month high. On the price front, the rate of input cost inflation eased, leading to a slower increase in output prices.
The headline South West Business Activity Index - a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors - posted 48.2 in October, up marginally from 48.0 in September.
The reading signalled a fall in business activity for the eighth month in a row, but the rate of contraction softened. That said, the South West continued to record a weaker performance than the 海角视频 as a whole, where output stabilised. Those panellists that saw activity decrease mainly linked this to uncertainty surrounding Brexit.
There were some reports of improvement in terms of new orders, however. New business continued to fall in October, but the rate of decline was marginal and the weakest in three months. Manufacturers saw new business expand, contrasting with a further decline in the service sector.
Companies responded to signs of improving demand by taking on additional staff, thereby ending a three-month sequence of job cuts. The South West was one of only two 海角视频 regions to see employment rise, alongside London. Some panellists indicated that staff had been hired to replace leavers from earlier in the year.
The combination of falling new orders and increased staffing levels meant that companies had spare resources to work on outstanding business. As a result, backlogs of work decreased at a sharp pace that was the fastest since February 2013.
Inflationary pressures softened at the start of the final quarter. Input costs rose sharply, but at the weakest pace since July 2016. While higher staff costs and currency weakness reportedly led to increased cost burdens, some panellists signalled lower raw material prices. In fact, manufacturing input costs decreased.
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The rate of output price inflation also softened in October and was the joint-weakest in three-and-a-half years. Some firms offered discounts to try and secure new orders.
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Business sentiment improved to a six-month high in October, with more than 48% of respondents predicting a rise in output over the coming year. Optimism reflected predicted growth of new orders and hopes of a resolution to Brexit. That said, sentiment continued to be weighed down by economic and political uncertainty.
Chris Preston, Chair, NatWest South West Regional Board, commented: “There were some signs of improvement in the South West private sector in October, raising hopes that the end of 2019 might not turn out to be as bleak as it seemed back in September. Firms in the region responded to a more moderate reduction in new business by taking on staff, one of only two areas of the 海角视频 to do so. As with much of the 海角视频, however, economic and political uncertainty continues to hang over the region and is likely to do so until the upcoming General Election at the earliest.”