• Swindon & Wiltshire Economy
• Friday April 17 2026

Iran war takes toll as output falls amid decline in new orders

Companies across the South West have signalled renewed falls in both business activity and new orders in March, according to the latest NatWest Growth Tracker.

At 48.7 in March, the headline South West Business Activity Index – a seasonally adjusted index which measures changes in the region’s output of goods and services – fell from 53.8 in February to below the neutral 50.0 threshold to signal a renewed fall in private sector output across the region.

Though modest, the decline ended a 14-month period of expansion, and followed a solid upturn in activity in February.

The amount of new work placed with South West private sector firms fell for the first time in six months in March.

But the rate of contraction was only mild. According to anecdotal evidence, greater uncertainty around the outlook and the rising cost of living had dampened sales.

And the rate of input price inflation accelerated to the sharpest since early-2023, which drove a steeper increase in selling prices.

Although demand conditions softened at the end of the first quarter, South West private sector firms signalled stronger optimism regarding the 12-month outlook for output.

Faye Long, chair of the NatWest South West Regional Board, said: “The latest PMI data for the South West indicated that rising costs – for both households and businesses – and greater global economic uncertainty weighed on the region’s performance in March.

“Output and new orders fell for the first time in 15 and six months, respectively, as the rate of input cost inflation surged to its highest in over three years.

“Heightened cost pressures stemmed from increased staff expenses and the effects of the war in the Middle East, resulting in sharper growth in selling prices.

“Tracking these price indices will be crucial to help assess the duration and intensity of inflation, which could place further strain on both consumers and businesses.

“More positively, business confidence remained robust when assessing the year-ahead. Notably, overall optimism picked up slightly since February, as firms expect greater client interest and investment to help drive growth.

“At the same time, the downturn in employment continued to ease, with staff numbers down only modestly amid signs of growing capacity pressure.”