BUSINESSES have seen a drop in activity as well as the first fall in new work for nearly two-and-a-half years, figures have revealed.

The NatWest PMI (Purchasing Managers’ Index) report for the South West, covering November 2018, showed softer demand was weighing on job creation.

The fall in new business meant firms were working through their backlogs at their quickest pace since December 2017.

Chris Preston, chair of NatWest’s South West regional board, which covers Dorset, said: “The latest set of Natwest PMI data for the South West private sector painted a disappointing picture, with both business activity and new orders declining for the first time in over two years.

“Weaker demand conditions and Brexit-related uncertainty meanwhile pushed business confidence down to its lowest level for nearly a year-and-a-half, which translated into only a marginal rise in staffing levels during November.

“A further sharp rise in costs meanwhile led firms to raise their charges again, which may dampen sales further in the coming months unless confidence and activity picks up.”

Business confidence for the year ahead slipped to a 17-month low, while there was a sharp rise in input costs which led to businesses raising their prices.

The headline South West Business Activity Index – which measures the combined output of the manufacturing and service sectors – registered just below the neutral figure of 50, at 49.1 – down from 52 in October. It was the first reduction in south west private sector output for 28 months.

The figures come as business prepares faces uncertainty about the Brexit situation, with less than three months to go before Britain is due to leave the European Union.

In December, Dorset Chamber of Commerce and Industry chief executive Ian Girling called for MPs to back the prime minister’s EU withdrawal deal. He said: “Businesses urgently need clarity on Brexit and have had enough of the political games being played.”

He gave his backing to an open letter published by business organisations including the British Chambers of Commerce, CBI, Institute of Directors and the Federation of Small Businesses, calling for MPs to put agreeing a deal ahead of party politics.