BUSINESS activity in the region has dropped to a nine-month low, according to figures from NatWest.

The bank’s data for the South West, which covers Southampton, shows slower increases in output and new business last month compared with November.

The NatWest South West Business Activity Index fell from 54.6 per cent in November to 52.3 in December.

It indicates the slowest growth in output for nine months, with the rate of growth in the region lagging behind that of the UK as a whole.

A number of firms cited the emergence of the Omicron variant and increased hesitancy among their clients about spending.

Average input costs rose for the 19th month in a row, although they were down on November’s all-time record – and firms continued to raise their prices.

Paul Edwards, chair of NatWest South West Regional Board, said: “Private sector companies in the South West recorded notably weaker upturns in output and new orders at the end of 2021 as the emergence of the Omicron variant and subsequent uncertainty dampened client spending and tourism across the region.

“This impacted confidence regarding future output expectations, which slipped to an 11-month low. Nevertheless, it was encouraging to see businesses press ahead with plans to expand and improve capacity, with employment rising at the sharpest rate since August.”

Sales rose for the tenth month in a row but the rate eased notably on the previous month and was the slowest since September.

Companies often mentioned that improved customer demand and new product ranges had boosted new work. However, a number said the Omicron variant had weighed on client spending and tourism.

The survey’s Future Activity Index remained positive but slipped for the fourth month in a row. Positive sentiment was at its lowest since January 2021.

The rate of job creation was the sharpest for four month and slightly above the UK figure. Higher staffing levels were generally attributed to efforts to expand capacity and forecasts of rising sales.

There was a ninth consecutive monthly rise in unfinished work.

Firms increased their selling prices sharply, but at the lowest rate for three months and slower than the UK trend.