Business activity in the West of England fell sharply in January after England’s third national lockdown was announced, new data shows.
The pandemic caused many companies to delay projects and cut jobs, according to the latest regional NatWest PMI survey. Disruption in supply chains also drove up costs for private sector firms.
The fall in business activity and new work in the region was the steepest for eight months - and above the 海角视频 average.
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The headline NatWest South West Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – dropped from 46.9 in December to 38.5 last month.
The amount of new business received by South West private sector companies fell for the fourth month running in January.
Employment across the region’s private sector also dropped for the 11th month running. A number of monitored firms mentioned that payrolls had fallen as a result of redundancies stemming from the weaker business environment.
The report found that companies in the region generally expect business to pick up over the next year, but the level of positive sentiment was the lowest recorded since last April.
Business confidence in South West was also weaker than on average across the 海角视频. While many companies anticipate activity levels to rise once the pandemic is under control, there are concerns around how long it might take following a resurgence in virus cases.
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After reaching a 26-month high in December, the rate of input cost inflation across the South West private sector eased in January. But the rate of increase remained sharp overall and above the long-run series trend. Higher expenses were often linked to greater transport and raw material costs.
Average selling prices set by South West private sector firms rose for the second time in the past three months.
Businesses that raised their output charges said this was due to the pass through of higher input costs to customers. However, the rate of inflation was only marginal and weaker than that seen across the 海角视频 as a whole. Some firms stated that pricing power was limited due to efforts to attract new business.
Paul Edwards, chair of the NatWest South West regional board, said: "Although the rate of decline was not quite as severe as those seen last spring, the data still add to expectations of a weak Q1 performance as the country seeks to curb the spread of the virus.
"Uncertainty over when restrictions can start to be eased meanwhile weighed on business confidence, which slipped to a nine-month low, though the ongoing vaccine rollout is a source of optimism."