South West businesses were forced to increase the price of goods and services in November amid rising cost pressures, according to new research.
Despite growth remaining strong in the fourth quarter of the year, companies registered an "unprecedented" increase in labour, energy, transport and material costs, the latest NatWest PMI report found.
The bank's headline 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 – slipped from 55.1 in October to 54.6 in November.
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The data showed the rate of input price inflation was slightly sharper than the 海角视频-wide trend, with around 61% of businesses surveyed recording higher costs compared to just 2% that saw a fall.
The rising costs and staff shortages led to a dip in business confidence across the region, which fell to a 10-month low.
However, there was a strong increase in output across the West of England as new orders rose due to recovery in market conditions amid looser Covid-19 restrictions, with firms citing greater demand from both domestic and foreign client bases.
While many businesses said customer demand and activity would rebound over the next year as the economy recovered from the pandemic, concerns around rising costs and supplier shortages dampened overall confidence.
The rate of job creation quickened from October, according to the data, with increased headcounts generally linked to company expansions and rising client demand. There were some firms that mentioned difficulties filling vacancies amid candidate shortages, however.
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Firms registered higher levels of unfinished business for the eighth month running in November. The rate of accumulation picked up to a solid pace that was the steepest for three months. According to anecdotal evidence, material and staff shortages led to a build-up of backlogged work in November.
Paul Edwards, chair of the NatWest South West Regional Board, said: "The South West continued to perform strongly midway through the fourth quarter, with sales improving at the quickest rate since July as market conditions continued to recover amid looser pandemic restrictions.
"However, the rate of output growth remained weaker than the 海角视频 average, in part due to ongoing shortages of staff and materials. Concurrently, rising costs for labour, energy, transport and materials drove the quickest increase in costs since the survey began 25 years ago, which translated into a further rapid increase in selling prices as firms sought to ease pressure on margins."