THE output of businesses in the South West rose only fractionally last month, according to research for NatWest.

The seasonally adjusted NatWest South West PMI Business Activity Index rose from 51.2 in June to 51.3 in July.

The latest reading signalled that output continued to expand modestly overall, and at a much weaker rate than those seen earlier in 2022.

The upturn was also softer than that seen on average across the UK as a whole.

The amount of new work received by private sector firms fell during, ending a 16-month period of expansion. Though only marginal, the reduction contrasted with a modest increase in new work across the UK as a whole.

Lower amounts of new business were often linked by panellists to sharply rising costs and reduced market confidence amid greater economic uncertainty.

There was a notable drop in business confidence about the year ahead, while optimism fell to its lowest since the series began in July 2012.

While many firms anticipate stronger customer demand and new products to support growth, there were often concerns that intense inflationary pressure, tighter financial conditions and a slowing global economy could dampen activity levels over the next 12 months.

Workforce numbers in the region grew for the 17th month running. Though solid, the rate of job creation was the softest seen over this period and weaker than the UK-wide trend.

Firms saw a slight decline in outstanding workloads, the first reduction since February 2021.

Paul Edwards, chair of the NatWest South West Regional Board, said: “The latest PMI survey data for the South West highlighted an increasingly gloomy outlook for the region's private sector, with new business dropping for the first time in nearly a year-and-a-half, and business activity remaining muted. Furthermore, confidence regarding the year-ahead outlook for output fell to its lowest since the series began a decade ago, underscoring heightened concerns over the cost-of-living crisis, rising interest rates and a slowing global economy.

"There were some bright spots, however, as firms continued to add to their workforce numbers, and inflationary pressures showed signs of easing as both input costs and output charges rose at softer rates. That said, mounting headwinds around the outlook suggest that firms may cut back on capacity in the months ahead as firms juggle sharply rising costs and weakening demand."