BUSINESSES in the South West saw a slowdown in the growth in new orders last month, even though activity continued to rise.

The seasonally adjusted NatWest South West Business Activity Index slipped in September, signalling a slight loss of momentum.

The rate of growth was the slowest seen for six months and below the national average.

The rate of new orders was the slowest seen since sales returned to growth in March. While some firms reported that customer confidence was supporting a rise in new work, others said clients were reluctant to commit to new projects and that higher prices had dampened sales.

Of the 12 regions monitored by the survey, only the North East registered a slower rise in new business than the South West.

Despite the slip in the index figure – from 54.7 in August to 54.3 in September – confidence about the 12-month business outlook was historically strong, despite a slip in optimism from August.

Paul Edwards, chair of the NatWest South West Regional Board, said: “South West private sector activity continued to expand strongly in September as firms reported a further improvement in business conditions following the easing of Covid-19 restrictions.

“However, momentum appeared to fade slightly amid a notable slowdown in new order growth, as firms indicated that sales were dampened by ongoing pandemic-related uncertainty and high selling prices.

“The latest survey indicated that companies raised their selling prices at one of the steepest rates on record due to a further surge in operating expenses and efforts to protect margins.

“At the same time, employment also rose at a slower rate, in part due to difficulties retaining and attracting workers which, combined with material shortages, drove a further increase in backlogs of work.

“Encouragingly, firms remained strongly upbeat that output will expand over the next year amid hopes that the pandemic will be brought fully under control, new investments and forecasts of increased travel.”

Firms generally anticipated a further recovery in economic conditions from the pandemic, greater investment and increased travel to boost activity levels over the next year.

Private sector firms expanded their workforce numbers for the seventh month in a row. The rate of job creation was the softest seen since April, but remained marked overall. The upturn was slightly softer than that seen across the UK as a whole, however.

Many respondents said they had hired extra staff to deal with new and future orders.

The seasonally adjusted Outstanding Business Index was above the neutral 50 level, showing a sustained rise in unfinished workloads.

Higher costs for staff, raw materials and transportation all drove a further marked increase in overall costs for business. The rate of inflation was rapid and among the fastest recorded by the survey, despite easing for the second month in a row.