- Greater new sales support faster rise in output
- Business confidence at eight-month high
- Cost pressures intensify but selling price inflation cools
Welsh businesses registered a faster rise in business activity during September amid a fresh expansion in new sales, according to the NatWest Cymru Growth Tracker.
The headline Wales Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the area's manufacturing and service sectors – posted 50.6 in September, up slightly from 50.4 in August, and signalled the quickest increase in output levels since May 2025. The rise in activity was only marginal, however, and slower than both the UK and series averages.
Meanwhile, new orders increased for the first time since January, albeit only fractionally. The improvement reportedly stemmed in part from new client wins. Similarly, business confidence ticked up to an eight-month high. Although employment levels continued to decline in September, the rate of job shedding eased to the weakest in 2026 to date.
Cost pressures quickened in September, but in a bid to drive sales, firms raised their selling prices at the softest pace since February.
Jessica Shipman, Chair, NatWest Cymru Board, said:
"A renewed improvement in demand conditions spurred a stronger expansion in output and a notable uptick in business confidence for the year ahead in September. Although only slight, growth in new orders was the first seen since January, and helped support the strongest quarterly performance in the Welsh private sector in 2026 so far. The uptick in optimism, meanwhile, resulted in the greatest degree of positive sentiment in the outlook since January.
"Greater demand was insufficient to pull firms out of retrenchment mode, however, as employment fell at a solid pace amid further signs of spare capacity. Cost considerations remained prevalent in the minds of business leaders, as input costs rose at a sharper pace. In fact, companies chose to prioritise new sales over margin protection, as selling prices increased at the weakest rate since February. Inflationary pressures in Wales were among the least pronounced of the 12 UK areas, however."
Performance in relation to UK
Business activity at Welsh firms increased again during September, and at a slightly faster rate. That said, the pace of growth was slower than the UK average.
Welsh private sector firms recorded a fresh uptick in new sales, following a seven-month period of contraction. The rise in new business was fractional, though only slightly softer than the UK average.
Stronger demand conditions underpinned a notable improvement in output expectations at Welsh businesses in September. The degree of confidence picked up to its highest since January and was historically elevated. Welsh firms were among the most optimistic of the 12 monitored UK areas.
Workforce numbers at Welsh businesses continued to contract in September. The rate of job cuts was solid overall and quicker than both the series and UK averages, although it nevertheless softened to the slowest since December 2025.
September data indicated a further strong depletion of backlogs of work at Welsh companies. The fall in outstanding business was the weakest in four months, but the fastest of the 12 monitored UK areas.
Operating expenses at Welsh businesses increased at a marked pace that was sharper than the series average. Although accelerating, the pace of cost inflation was the slowest of the 12 monitored UK areas. Meanwhile, output charges continued to rise, but at a slower pace at the end of the third quarter. The rate of selling price inflation cooled to the weakest since February and was among the least marked of the 12 monitored UK areas.
