Wales at the top for economic activity – survey

BUSINESS activity growth in Wales remained strong in September, according to figures from NatWest.

The NatWest PMI (Purchasing Managers’ Index) data pointed to robust business conditions in Wales during September.

Strong growth in business activity and new orders was sustained, while extra staff were hired at the fastest pace in one year.

Firms were also confident demand conditions would support output over the coming 12 months.

The headline Wales Business Activity Index – a seasonallyadjusted index that measures the combined output of the manufacturing and service sectors – registered 55.6 in September, down from 56.0 in August, signalling a slower pace of expansion in business activity at Welsh private sector companies. Nonetheless, the growth rate was deemed strong overall by the study and the jointfastest of all 12 monitored UK regions, alongside the North West.

Sector data indicated that the upturn was broad-based, with both manufacturers and service providers raising output markedly. Anecdotal evidence attributed growth to stronger client demand.

Welsh private sector businesses continued to observe robust inflows of new work during September.

Although the pace of expansion has eased since August, it remained strong overall and notably faster than the UK average. Demand from both new and existing clients had improved during the latest survey period, according to panel members.

In line with rising output and healthy sales performances, firms expanded their workforces in September. In fact, the rate of job creation climbed to a one-year high.

Despite the strong rise in workloads, capacity pressures remained muted in September, as increased staffing levels and strong output growth helped firms complete new orders.

Input costs increased sharply during the latest survey period. Material shortages were reported by panellists as a factor driving up operating expenses. With the exception of Scotland, however, Wales observed the weakest rise in cost burdens of the 12 monitored UK regions.

To offset margin pressures, output prices were increased during September at a pace that was broadly in line with the UK average. That said, the rate of inflation eased for a third month running to the weakest since July 2016.

Following August’s 12-month low, Welsh private sector business optimism strengthened in September and was strong overall. Investment into new technology, positive sales forecasts and new product launches were mentioned as factors supporting a confident outlook towards future output.

Kevin Morgan, NatWest Wales Regional Board, said: “Wales’ private sector economy was one of the top performing areas of the UK in September, with only the North West matching growth in business activity.

“Supporting this upturn were healthy inflows of new work, which rose quicker than seen for the UK overall.

“Accommodative demand conditions supported further growth in payroll numbers. Indeed, employment increased at the fastest pace in one year, indicating a positive forward-looking perspective among Welsh businesses.

“This was further evidenced by a strengthening of optimism following August’s 12-month low.”