Business activity in the West of England fell last month but confidence among firms is on the rise, new data has revealed.
According to the NatWest South West Business Activity Index – a seasonally adjusted index that measures month-on-month changes in manufacturing and service sectors – output rose from 28.1 in May to 46.4 in June.
Though sharp, the rate of reduction was the weakest recorded since the current downturn began in March.
The index, which is adjusted for seasonal factors, remained below the 50.0 no-change threshold in June, to signal a fifth successive monthly drop in new orders received by South West private sector firms.
The rate of decline was the softest recorded since February and much slower than April's record pace, but it remained sharp overall.
The pandemic and subsequent disruption to the economy continued to weigh on client demand, according to panel members.
However, business confidence continued to recover from the record low seen in March. Positive sentiment was at the highest for four months and stronger than the series average.
Businesses widely anticipate that activity will rise over the coming year as the economy recovers from the pandemic.
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Optimism towards the business outlook also improved across the 海角视频 as a whole, but was not as strong as seen in the South West.
However, staffing levels across the region's private sector firms fell further during June. Despite easing for the second month running, the rate of job shedding remained substantial overall.
A combination of redundancies and furloughed workers drove a further reduction in workforce numbers.
The region's companies also signalled a further decline in the amount of unfinished work at their units in June.
This stretched the current sequence of reduction to 20 months. The rate of contraction eased further from April's record pace, but remained historically sharp overall.
A number of monitored firms mentioned that they were still operating with spare capacity following a notable drop in sales when the pandemic escalated.
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After declining in the prior two months, average input costs faced by South West private sector companies increased during June. Some panellists mentioned that the purchase of PPE equipment for workers had driven the upturn in expenses.
South West firms increased prices charged at the end of the second quarter. Though only fractional, it marked the first upturn for four months.
Some monitored companies mentioned raising their prices due to rising expenses. However, there were also reports that tough competition had limited overall pricing power.
Paul Edwards, Chair, NatWest South West Regional Board, said: “The latest PMI data for the South West signalled that the worst of the Covid-19 related downturn is now behind us, as companies signalled much weaker falls in output and new orders compared to the previous three months.
“Furthermore, companies were much more optimistic that business activity would increase over the following year, with sentiment improving to its highest since February.
"As the 海角视频 economy slowly starts to reopen and business operations begin to return to normal, it's hoped that this will lead to a recovery in new business which in turn can support further expansions in output.
“However, there remain a number of threats to the outlook, including fears of a second wave of infections and the re-introduction of lockdown measures, and the winding down of the government’s job retention scheme which is currently supporting millions of workers."