Welsh companies experienced in fall in business activity and new sales during July, according to latest data from NatWest.
Its headline Wales business activity index – a seasonally adjusted index that measures the month-on-month change in the combined output of the manufacturing and service sectors – fell from 50.5 in June to 49.1 to signal decrease in output levels. The contraction (defined as anything below 50 on the index) follows monthly back-to-back expansions in activity.
The rate of decline in output was the third fastest of the 12 nation and regions of the Ƶ assessed, behind Yorkshire & Humber and Scotland.
Welsh private sector firms signalled a renewed decrease in new orders during July. Although modest, the pace of decline was the quickest in four months. That said, the pace of contraction was slightly slower than the Ƶ average.
Despite a drop in new order inflows, Welsh companies were more upbeat in their expectations regarding output over the coming year in July. The level of positive sentiment picked up to the highest since February. Nonetheless, expectations were muted relative to both the long-run series and Ƶ averages.
Jessica Shipman, chair, of the NatWest Wales board, said: “July data indicated a dip in demand conditions at Welsh firms, as a renewed fall in new business dented output levels. Customer hesitancy and a fragile sales environment weighed on the private sector, as companies cut workforce numbers again amid a sharper reduction in backlogs of work.
“Nevertheless, the pace of job shedding slowed to the weakest in nine months as business confidence picked up to its strongest since February. Businesses hope for a rebound in customer purchasing through the remainder of 2025.
“Efforts to cut headcounts also in part stemmed from the ongoing fallout from recent changes to National Insurance contributions and the Minimum Wage. Despite easing in June, inflationary pressures regained some momentum and although firms were able to raise their selling prices, new order inflows suffered. Amid growing strain on margins, containing pressure on balance sheets will remain a priority in the coming months.”
