‘Welsh firms continue to signal a recovery in business post-Covid’

THE output of the private sector in Wales has eased but remains in positive terrain, according to latest research from NatWest Bank.

Its Wales PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the manufacturing and service sectors – registered 56.2 in April, down from 58 in March. Anything below 50 denotes contraction.

Although the slowest for three months, output growth was linked to greater client demand and a further uptick in new business. The rate of growth was steeper than the series average but slower than that seen across the UK as a whole.

The sharper pace of growth in new business stemmed from a quicker manufacturing sector expansion.

Th index also indicates stronger output expectations regarding the 12-month outlook across the Welsh private sector. Companies noted that hopes of greater client demand and further upticks in new orders, alongside investment in new product lines, supported optimism. The level of positive sentiment was among the highest of the 12 monitored UK areas, weaker than only the South East and Yorkshire & Humber.

Workforce numbers across the Welsh private sector expanded for the 12th successive month during April. Employment rose following a further increase in new business and challenges retaining staff. Although the rate of job creation softened slightly from March, it was sharp overall and quicker than the UK average. Welsh service providers continued to record a faster rise in staff numbers than manufacturers.

Firms indicated a further and faster increase in cost burdens in April. The rise in input prices was the secondfastest of the 12 monitored UK areas, behind only Northern Ireland. Alongside higher wage bills, firms stated that greater material, fuel and energy costs drove inflation.

Kevin Morgan, of the NatWest Wales board, said: “Welsh private sector firms continued to signal a recovery in business activity and client demand following the easing of Covid-19 restrictions. Although April data indicated a softer expansion in output, firms reported robust demand conditions as business confidence strengthened and employment rose at a sharp pace.”