By Amanda Wilkins – 10 September 2024
Business
New data from the NatWest Regional Growth Tracker survey has revealed that output growth has reached a 28 month high, and the South West has seen the second strongest rise in output regionally.
Output growth in the South West accelerated in August, and was the second-strongest of the 12 UK regions and nations monitored by the NatWest Regional Growth Tracker survey. Other positive news highlighted by the latest data included another round of marked sales growth and a further increase in local jobs. Price indices retreated since July, though the rate of charge inflation was the highest seen across the UK.
The headline South West Growth Tracker 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 – stood at 55.1 in August, up from 54.7 in July and signalling the quickest increase since April 2022. Growth was reportedly boosted by demand strength, capacity expansion and successful advertising.
Although new order growth eased in August, it was marked and the second-strongest since May 2022. Qualitative evidence accompanying the survey showed that sales were supported by marketing initiatives, AI (artificial intelligence) roll-out and the signing of pending projects.
Despite receding since July, the rate of charge inflation was the highest of all areas of the UK. Companies indicated that prices had been raised in response to greater input, insurance, labour and utility costs.
Average input prices rose to a lesser extent, but the rate of inflation remained elevated. The respective seasonally adjusted index was more than ten points above the no-change mark of 50.0.
Paul Edwards, Chair of the NatWest South West Regional Board, said: ” Although the South West lost its top position in the new business growth rankings to London, the region achieved a commendable second place, highlighting robust demand for local goods and services in August.
“Companies noted that advertising efforts and the rollout of AI supported sales, while clients showed increased willingness to finalise pending agreements.
“Strong customer demand prompted firms to scale up business activity volumes and hire additional staff, aiding upbeat business expectations for the upcoming year.
“It’s also encouraging to see inflation rates declining, alongside firms securing a healthy influx of new work, even as they reported the highest rate of charge inflation across the UK.”
London overtook the South West when it came to new business growth in August, but the rate of expansion seen locally was nevertheless the second-best of the 12 monitored UK regions and nations.
The level of positive sentiment seen among South West firms in August was beaten only by July 2024 over the past two-and-a-half years. Confidence was also above the national average. Optimism was underpinned by capacity expansion efforts, diversification, better economic conditions, advertising and hopes that pending agreements will be signed.
The local increase in payroll numbers was broadly aligned with the national average, with the South West placed sixth out of 12 in the UK regions and nations rankings regarding employment trends. In turn, this sustained rise in headcounts allowed companies to allocate resources towards the completion of pending workloads.
Outstanding business volumes decreased to the greatest extent in nine months. Northern Ireland bucked the wider trend and was the sole area to see rising backlogs, with only the East Midlands posting a slower fall than that recorded in the South West.