BUSINESSES saw a “strong and accelerated rise” in activity in October, research suggests. 

The NatWest South West Business Activity Index – which covers Southampton and measures the output of the region’s manufacturing and service sectors – rose from 54.3 in September to 55.1 in October.

It was the quickest rise in output since July, although it was slower than for the UK as a whole.

The rate of new order growth rebounded in the region after easing in September. But there were reports of supply chain problems and uncertainty over the pandemic restricting overall growth.

The level of positive sentiment weakened for the second month in a row, however, with optimism at its lowest since January and weaker than the UK-wide trend.

Employment increased for the eighth month in a row, but the rate of job creation was at its softest since March and behind the UK as a whole.

Outstanding business remained above the neutral 50 level when seasonally adjusted, but the rate of accumulation was the slowest in seven months.

Paul Edwards, chair of NatWest’s South West Regional Board, said: “Latest NatWest PMI (purchasing managers index) data showed a stronger increase in business activity across the South West, fuelled by a notable rebound in overall new work.

“Companies commented on higher sales across both new and existing client bases as business conditions continue to normalise.

“However, the recovery has been accompanied by a rapid upturn in input prices, with greater staff, energy and raw materials costs all driving the steepest increase in operating expenses since the series began nearly 25 years ago. There were also reports of difficulties recruiting and retaining staff amid tight labour market conditions, which in turn weighed on employment growth. Labour shortages, supplier delays and lingering COVID-19 uncertainty all dampened optimism towards the year ahead, which slipped to a nine-month low, and are likely to limit firms’ abilities to expand in the months ahead.”