• Swindon & Wiltshire Economy
• Wednesday January 14 2026

New orders expand across South West at second-fastest rate in over a year

Business activity continued to increase across the South West private sector at the end of last year, supported by a solid rise in new orders, according to the first NatWest Growth Tracker survey of 2026.

The headline South West Business Activity Index – which measures changes in the region’s output of goods and services – posted 52.2 in December, down slightly from 52.5 in November.

This signalled a moderate expansion of activity across the region, and extended the current period of growth to one year.

The sustained upturn in activity was supported by a notable uptick in new work at the end of the year. Sales grew at the second-fastest rate in over a year during December, surpassed only by last August.

As a result, the amount of backlogged work expanded for the first time in over a year.

The latest data also highlighted a slower reduction in employment, but sharper increases in input costs and output charges.

Faye Long, chair of the NatWest South West Regional Board, said:
“The South West had a strong end to 2025, with companies across the region seeing a steeper increase in new business and a further rise in output.

“Greater workloads also led to the first upturn in outstanding orders for over a year, to suggest that capacity pressures are building. Consequently, staff numbers fell at a slower rate.

“However, the further drop in employment reflects a key issue of sharply rising costs, which in turn is dampening hiring activity.

“The latest survey showed that input prices rose to the greatest extent since last May, which led to a sharper rise in firms’ own selling prices.”

* The region’s performance in relation to UK

The South West recorded the third-strongest increase in output of all 12 UK regions and nations at the end of 2025 (behind London and the West Midlands).

The solid rate of new order growth seen in the South West also exceeded that seen on average across the UK as a whole.

Local firms’ expectations for activity in the year ahead softened, however. While businesses generally anticipate output to increase over the course of 2026, the level of optimism fell to an eight-month low.

The degree of confidence was also the lowest across England and Wales, with only Scotland and Northern Ireland being less confident at the end of the year.

Planned company expansions, new products, higher sales targets and customer wins were all anticipated to drive growth.

However, a number of firms expressed concerns over the economic outlook and inflation.

After decreasing at the quickest rate for five years in November, South West private sector firms signalled a slower reduction in headcounts at the end of the year.

But the pace of job shedding remained marked overall and exceeded the UK-wide average.

There were a number of reports that staffing levels had declined as firms had chosen not to replace voluntary leavers amid concerns over costs.

The slower reduction in workforce numbers coincided with signs of renewed pressure on capacity. Outstanding business rose for the first time in just over a year in December.

Though marginal, the rate of accumulation was the most pronounced for three-and-a-half years.

According to anecdotal evidence, higher amounts of new business contributed to the fresh upturn in backlogs.

Across the 12 UK regions and nations, only London recorded a steeper increase in unfinished work than the South West.

Companies across the South West reported a further increase in average input costs during December. Notably, the rate of inflation accelerated to the sharpest since last May and exceeded the UK-wide trend.

Supplier price hikes and higher costs for labour, fuel and materials (notably metals and food) were all linked to the latest increase in operating expenses. Input prices have now risen continuously for just over five-and-a-half years.

Stronger cost pressures prompted firms to raise their selling prices again in December. Furthermore, the rate of charge inflation was the sharpest recorded since last April.

The local increase in output charges was also the second-steepest of all 12 UK regions and nations (after Northern Ireland).