BUSINESSES are worried about the future as activity across Swindon and the south west has plunged at a rate not seen since the start of 2021.

The headline NatWest South West PMI® Business Activity Index – which measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – dropped from 46.2 in August to 43.5 in September.

This sharp and accelerated reduction in business activity was much quicker than that seen across the UK as a whole.

Anecdotal evidence suggests the weaker economic climate and reduced customer spending had caused it.

The amount of new work and sales companies had received continued to dwindle last month at a faster rate than the rest of the country. Companies often mentioned that a weaker economic climate and rising costs had led clients to cut back on spending or delay projects.

Some firms hope that greater investment, export opportunities and a recovery in overall demand conditions would support growth – but others cited concerns over the economy, labour shortages, rising interest rates and the cost of living crisis as reasons for their pessimism about the future.

Sentiment regarding output levels in the year ahead hit its lowest since the Natwest index series began over a decade ago.

After rising at the weakest rate for a year-and-a-half in August, employment across the South West private sector declined during September, perhaps due to the non-replacement of voluntary leavers and redundancies.

The amount of unfinished work at south west private sector firms declined for the third month running. Businesses often mentioned that reduced intakes of new work had enabled them to work through backlogs.

The rate of input price inflation across the region softened to its lowest since May 2021, but the upturn remained rapid overall and much quicker than the series average.

Panel members commented on price increases for energy, wages and raw materials.

Regional businesses raised their average selling prices for the 21st month in a row and mentioned passing on additional costs to clients via higher selling prices.

NatWest South West Regional Board chair Paul Edwards said: “The deteriorating economic outlook and high inflation were reportedly behind the latest falls in activity and demand, as customers often cut back on expenditure or delayed projects. The weaker economic climate also weighed on business confidence for the year ahead.

“At the same time, companies continued to see rapid increases in costs, as higher payments for energy, wages and raw materials all pushed up expenses.”