New business

A new business in the southwest is growing


Businesses in the Southwest saw a significantly larger increase in sales and further strong production growth in November, according to the latest regional PMI® data from NatWest.

However, rising costs and staff shortages caused business confidence to drop to its lowest level in ten months. At the same time, companies have recorded an unprecedented increase in input costs, which has resulted in a further substantial increase in the prices charged.

The NatWest South West Business Activity Index – a seasonally adjusted index that measures the monthly change in the combined output of the region’s manufacturing and service sectors – fell from 55.1 in October to 54.6 in November, and continued to rise. report a sharp increase in production across the region. However, growth remained weaker than that observed at the national level for the fourth consecutive month.

The seasonally adjusted index for new businesses reported a steady increase in new jobs placed with private sector businesses in the Southwest in November. In addition, the rate of expansion accelerated for the second consecutive month and was the highest since July. New business increased at a similar rate nationally.

New orders have risen, according to panel members, due to a further upturn in market conditions amid looser Covid-19 restrictions, with companies citing increased demand from domestic and foreign customers.

Business confidence in the South West’s private sector remained strong in November. However, the overall level of positive sentiment fell to its lowest level in ten months and was lower than the UK average. While many companies expect customer demand and activity to rebound over the next year as the economy recovers from the pandemic, concerns about rising costs and supplier shortages have shaken global confidence. .

Adjusted for seasonality, the employment index crossed the threshold of 50.0 unchanged to indicate a ninth consecutive monthly increase in private sector employment in the South West. The job creation rate picked up from October and was sustained, although below the national average.

The increase in headcount was generally related to the expansion of the business and increasing customer demand. However, some companies mentioned difficulties in filling vacant positions due to a shortage of candidates.

Private sector businesses in the Southwest recorded higher levels of noncompletion for the eighth consecutive month in November. The rate of accumulation accelerated at a solid pace, the highest in three months. That said, the growth rate remained slower than that seen in the UK as a whole.

Anecdotal evidence suggests that equipment and personnel shortages resulted in a backlog of backlogged work in November.

The latest data showed cost pressures intensified in the private sector in the Southwest in November. Additionally, the input price inflation rate hit a new series record for the second month in a row and was slightly sharper than the UK-wide trend. Around 61% of panel members saw higher costs, compared with just 2% who saw a decrease, with many companies citing increased prices for materials, energy and personnel, as well as higher transportation bills. high.

Private sector companies in the Southwest increased their selling prices again in November, extending the current period of inflation to 11 months. Despite easing over the month and remaining below the UK average, the rate of increase was generally rapid. When higher production costs were reported, companies generally attributed this to the passing on of higher input costs to customers.

Paul Edwards, NatWest South West Regional Council Chairman, said: “The South West continued to show strong performance in the middle of the fourth quarter, with sales improving at the fastest pace since July, as Market conditions continued to recover amid looser pandemic restrictions. However, the rate of production growth remained lower than the UK average, in part due to persistent shortages of personnel and equipment.

“At the same time, rising costs for labor, energy, transportation and materials have led to the fastest increase in costs since the survey began 25 years ago, which resulted in another rapid increase in selling prices as companies sought to ease the pressure on margins.