Private sector companies across the South West signalled a slower increase in activity in April, according to the latest NatWest Growth Tracker survey data.
The 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 a five-month high of 54.0 in March to 51.9 in April.
Output across the region has now increased in each of the past four months, though the latest expansion was modest overall.
Firms have reported that increased global economic uncertainty, particularly related to US tariff announcements, is significantly impacting demand across various regions. This is reflected in observations of reduced client activity and overall caution towards spending.
Latest data indicated that new business placed with private sector firms across the South West declined at the start of the second quarter. Though only modest, the reduction contrasted with an increase in March. Concurrently, business confidence across the South West waned in April, slipping to the lowest recorded in nearly two-and-a-half years.
The survey was conducted after US tariff announcements on 2nd April, which, at the time, saw minimum tariff rates of 10% applied to imports into the US, as well as higher so-called ‘reciprocal’ tariff rates on a number of countries. A subsequent announcement on 9th April saw a 90-day pause on most higher tariff rates.
Commenting on the Tracker’s findings, Sebastian Burnside, NatWest Chief Economist, said, “The tracker this month reflects the challenges that economic uncertainty can create for UK businesses of all scales.
“Firms across the UK reported a challenging start to the second quarter, with demand for goods and services falling in all areas amid a backdrop of economic uncertainty and rising prices. The South West bucked the wider trend, however, and was the only region monitored by the survey to see business activity increase in April.
“It’s encouraging that firms are still looking to the future with some optimism, although growth expectations are lower than they have typically been in the past.
“Rising labour costs have added to pressure on businesses, following April’s increases in National Insurance contributions and minimum wages. As firms look to mitigate rising costs, we’ve seen average prices charged for goods and services increase at faster rates, as well as a greater focus on workforces. Labour markets in all areas of the UK have felt the impact to some degree in recent months, with only Scotland avoiding a fall in employment in April.
“We cannot ignore the backdrop during which this survey was carried out but regardless, as we’ve seen in the past, UK business is resilient and can always offer reasons for optimism throughout.”
Performance in relation to UK
Across the UK as a whole, business activity fell for the first time in a year-and-a-half in April (index at 48.5). Notably, the South West was the only UK region to register growth of output, with reductions seen across the 11 other monitored nations and regions.
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Pictured above: Image by Markus Winkler from Pixabay
