The South West saw its strongest rise in business activity in nine months in January as companies saw rising demand and grew in confidence, a key economic survey has shown.
The latest NatWest South West PMI Business Activity Index also showed businesses felt inflationary pressures were easing - but that costs remain high by historic standards.
The PMI index is a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors. Any figure above 50 represents growth.
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The index for the South West lifted from 51.3 in December to 52.0 in January. That was the best figure since last April, and NatWest says firms polled were “often linking the upturn to improved demand conditions and higher sales”
Respondents also reported a second month of sales increases, suggesting improved marketing and new client wins had supported the latest upturn.
Optimism about the outlook for the year ahead hit a two-year high, with companies hoping improved economic conditions will boost output.
Staffing levels at South West companies were broadly stable in January, while across the 海角视频 employment increased slightly for the first time in five months.
Local companies reported a sharp rise in average input costs, including in salaries, raw materials and energy costs, while companies also reported increasing prices to pass higher costs onto customers.
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NatWest said: “Whilst solid and above the series average, the rate of charge inflation was the slowest recorded in just under three years. It was also softer than that seen across the 海角视频 as a whole.”
Paul Edwards, chair of the NatWest South West regional board, said: “Business conditions faced by South West companies continued to improve at the start of 2024, with the latest PMI data indicating stronger growth momentum for the second straight month. Companies anticipate the recovery to continue in the months ahead, driving overall optimism around the outlook to a two-year high.
"Signs that inflationary pressures continued to cool at the start of the year will also provide some much-needed relief for businesses. However, price indices are still pointing to steep cost pressures overall, and the recent disruption to supply chains in the Red Sea have the potential to push up expenses further in the months ahead."