BUSINESSES have reported a slowing rate of increase in output and new orders, a survey has found.

The latest NatWest PMI report found the private sector in the South West, including Southampton, continued to expand strongly in April, but staff were hard to come by and inflationary pressures remained intense.

A further steep increase in input prices fed through into a record rise in prices charged by firms taking part.

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 – registered 60.3 in April, down from 64.3 in March.

The reading signalled a softer, but still sharp increase in business activity that was quicker than the UK-wide trend.

New business placed with South West private sector companies rose for the 14th month running. Though sharp at 53.2, the upturn was the softest for three months.

There was strong optimism about the 12-month outlook, with many firms anticipating a further recovery and greater investment in technology and products, but others expressed concerns about costs, shortages and global economic uncertainties.

The rate of employment growth across the South West eased for the first time in three months, although the pace of job creation remained sharp overall. The level of unfinished business rose for the 13th month in a row.

The seasonally adjusted Input Prices Index signalled a further increase in operating expenses, stretching the current period of inflation to 23 months, and firms raised their selling prices, with the rate of charging inflation reaching a new record for the survey.

Paul Edwards, chair of NatWest South West Regional Board, said: “The latest NatWest PMI data highlighted a slight softening of growth momentum across the South West private sector, with increased global economic uncertainty, material shortages and rising costs all weighing on the latest expansions of output and new work.

“Nonetheless, the region noted the joint-quickest rise in sales of all 12 UK regions, with more marked slowdowns in demand seen elsewhere. Encouragingly, business confidence improved slightly from March's near-two year low, and companies continued to expand their staffing levels. However, increased global uncertainty, notably the Russia-Ukraine war and lockdowns in China, combined with sharply rising costs and shortages, means a further slowing of growth momentum is likely."