Private-sector output up for first time since August
OUTPUT in the Welsh private sector has expanded for the first time since last August, new research from NatWest shows.
Its PMI business activity reported output at 50.3 in March, compared to 47.5 in February. Anything below 50 denotes contraction. NatWest pointed to anecdotal evidence suggesting that stronger demand conditions and a return to growth in new orders drove the latest upturn in business activity.
Welsh private-sector businesses also signalled a renewed rise in new orders at the end of the first quarter, thereby ending a nine-month sequence of decline with firms linking growth to stronger customer confidence and improved demand conditions. Of the 12 monitored UK areas, only London and Northern Ireland posted stronger upturns in new business.
Output expectations among Welsh businesses also remained upbeat for the year ahead, although lower than the UK average. March’s data also indicated a renewed increase in workforce numbers at Welsh firms, thereby ending a seven-month sequence of job shedding. The rise in employment was marginal overall, but the second fastest in almost a year and a half. Job creation was attributed to greater new order inflows and efforts to expand capacity. The pace of employment growth was quicker than the UK average.
Outstanding business continued to decrease in March, thereby extending the current sequence of contraction that began in May 2022.
Lower backlogs of work were linked to sufficient capacity to process incoming business. That said, the pace of decline softened to the slowest since December 2022 amid a renewed rise in new orders.
Jessica Shipman, chairman of the NatWest Cymru board, said: “Welsh firms signalled a stronger end to the opening quarter of the year, as output and new orders returned to growth following improved demand conditions.
“This ended a nine-month sequence of a subdued sales environment, with new business rising at the sharpest pace in a year. Subsequently, firms hired new workers for the first time since July. Backlogs fell at the slowest pace since December 2022 amid signs of pressure on capacity.
“Inflationary pressures remained elevated in March. Costs rose at a slower pace, but one still marked as transportation fees increased following disruption to Red Sea routes. Selling prices increased at a faster rate, however, as firms were better able to pass through higher costs amid stronger demand conditions.”