- Output and new business increase for a third consecutive month
- Employment rises for a second successive month
- Export conditions improve at fastest rate in more than four years
South West businesses continued to grow in September, according to the latest NatWest South West Growth Tracker, with activity, new business and employment all remaining in expansion territory despite a more challenging operating environment.
The headline South West Business Activity Index stood at 51.5 in September, down from 53.0 in August but still signalling a third consecutive month of growth across the region's private sector. Firms linked the increase in activity to new projects, stronger client retention and continued inflows of new work.
New business also increased for a third successive month, although at a slower pace than earlier in the quarter. At the same time, employment rose for the second month running, making the South West one of only five UK regions and nations to record jobs growth during September.
Export conditions also strengthened, with the South West Export Climate Index reaching its highest level since May 2022, reflecting improved trading conditions across several key international markets.
Cost pressures remained elevated, driven by higher raw material, fuel and energy costs. Many firms responded by increasing prices to help protect margins.
Faye Long, Chair of the NatWest South West Regional Board, commented:
"South West businesses enter the final quarter of the year from a position of resilience. While growth softened compared with the stronger pace we saw during the summer, firms continue to win new work, expand activity and create jobs.
"It's particularly encouraging to see employment rising for a second consecutive month and export conditions improving, underlining the strength and adaptability of businesses across the region.
"There is no doubt that higher costs and ongoing global uncertainty continue to create challenges. However, businesses are continuing to grow, invest in customer relationships and build opportunities, putting them in a good position as we head into the final months of the year."
Performance in relation to UK
Business activity continued to expand across the South West in September, although the pace of growth was slightly slower than the UK average. New orders also increased for a third consecutive month, in line with a modest rise seen nationally.
The South West was one of only five UK regions and nations to record employment growth, with staffing levels rising for the second month in a row while employment fell modestly across the UK overall.
Outstanding workloads continued to decline, suggesting firms largely had sufficient capacity to keep pace with demand and work through existing orders.
Input cost inflation accelerated during September and outpaced the UK average, making the South West one of the regions most affected by rising business costs. Firms responded by increasing prices, although output price inflation remained slightly below the national trend.
While confidence eased compared with August and remained below the UK average, businesses continued to expect activity to grow over the year ahead, supported by opportunities linked to exports, AI and defence-related sectors.
