Wales witnesses fastest business activity growth in last month

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This surge is reflected in the NatWest Wales PMI® Business Activity Index, which rose to 52.0 in May from 50.8 in April.

The index measures the monthly change in the combined output of Welsh manufacturing and service sectors

Despite being slower than the series average, this increase was backed by better demand conditions and a consistent hike in new orders.

However, the growth in activity was one of the weakest amongst the 12 UK regions and nations monitored in this report, only ahead of Yorkshire & Humber, the South East, and East of England for growth rate.

Private sector firms in Wales did mark a third month of increased new orders in the second quarter, and with maintained demand conditions and new client wins, growth has occurred although at a slower pace.

Welsh businesses were still more optimistic about the output outlook for the upcoming 12 months.

The level of confidence touched a three-month high and was one of the strongest in two-and-a-half years.

While confidence levels skyrocketed, the new orders were weaker than the United Kingdom’s average.

The increase in employment at Welsh private sector firms attributed to the higher number of new order intakes.

This increase has been consistent for three months and was said to be at a moderate pace, which was noted as the fastest since October 2022.

The expansion in headcount has kept an upbeat pace and was faster than the UK average.

As has been the tradition since May 2022, Welsh firms registered yet another monthly decrease in unfinished business in the second quarter.

The decline of leftover work accelerated to its fastest rate in three months due to improvements in supply chains and ample capacity.

Among the 12 regions and nations surveyed, Wales saw the fastest decrease in backlogs.

The input prices for Welsh private sector firms saw a significant rise in May due to increases in raw material and fuel prices, along with higher wage bills.

The cost inflation, although having softened from April’s high, was approximately similar to the long-run series average.

Costs signalled by Welsh firms were higher than the average UK level.

Selling prices of Welsh private sector firms continued to increase at a historically high pace.

Firms aimed at passing on the increased cost to the consumers, causing inflation to slow down to its slowest in four months.

Commenting on the findings, Jessica Shipman, chairwoman of NatWest Cymru Regional Board said: “Welsh businesses signalled a stronger output growth in May, as sustained demand conditions and a further rise in new order intakes supported the faster expansion in activity.”

Ms Shipman also noted that inflationary pressures, while still elevated, have softened since April, which should help boost new sales.

However, she warned that the rate of inflation is higher than the series’ average, suggesting that customer demand may not grow significantly in future months as purchasing power remains under pressure.

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