JUNE saw the slowest monthly increase in business activity in the south west since march last year.

The latest data from NatWest shows a weaker rise in business activity and new work while inflationary pressures remain intense and business confidence hits lowest since April 2020

June survey data signalled a further notable slowdown in the rate of business activity growth across the South West private sector.

The data pointed to the weakest increase in output since March 2021 that was only mild overall.

The softer rise in activity coincided with only a marginal expansion in new orders, as firms indicated that the cost of living crisis and increasingly uncertain economic outlook had led clients to become more hesitant to spend. Prices data indicated that inflationary pressures remained substantial, with rising costs and worries over the economy also dampening business confidence to its lowest level in over two years.

The headline NatWest South West Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – declined from 55.0 in May to 51.2 in June, to signal only a modest increase in business activity.

Notably, the rate of growth was the slowest seen for 15 months and weaker than the UK average.

Private sector firms in the South West registered a further increase in new orders during June, thereby stretching the current run of rising sales to 16 months. That said, the rate of growth slowed notably on the month to a marginal pace that was the slowest seen over this period. According to panel members, uncertainty over the economy and reduced client spending amid the cost of living crisis dampened new business.

New orders also expanded at a slightly slower rate at the national level and only slightly.

Paul Edwards, chairman of NatWest South West Regional Board, said: "The current cost of living crisis, which is pushing up expenses for both companies and households, weighed heavily on expectations for the year ahead, which hit their lowest in over two years. Combined with rising interest rates and a slowdown in economic activity, this could dampen new business and output further in the months ahead."