• Swindon & Wiltshire Economy
• Tuesday August 26 2025

South West business growth slows amid renewed drop in sales

Firms in the South West signalled a softer rise in business activity during July, according to the latest NatWest Growth Tracker, as demand conditions softened.

At 51.1 in July, the headline South West Business Activity Index slipped from 53.9 in June, but remained above the crucial 50.0 level to signal an expansion of output across the region for the seventh month in a row.

However, the rate of growth was the softest seen since February and only marginal.

Business activity also expanded at a slower rate across the UK as a whole, though the upturn was slightly stronger than that seen in the South West.

Companies that registered an improvement in activity levels often linked this to work on previously placed orders and new customer wins. However, some firms indicated that subdued market demand and fewer new projects had dampened growth.

The seasonally adjusted New Business Index signalled a fresh reduction in overall new sales across South West private sector firms in July, with the rate of decline the steepest since September 2023.

Staffing levels at private sector firms in the South West meanwhile fell for the ninth straight month in July. Notably, the rate of job shedding was the quickest recorded since February and sharp.

Input costs faced by South West private sector firms continued to rise markedly at the start of the third quarter. This was despite the rate of inflation easing to a four-month low. At the same time, companies in the region signalled a sharp and accelerated rise in average selling prices.

Faye Long, chair of the NatWest South West Regional Board, commented:
“The tracker showed that South West private sector firms struggled to maintain growth momentum in July amid a slowdown in customer demand.

“The fresh fall in sales coincided with reports of squeezed client budgets and greater uncertainty over the economic outlook. Cost concerns were also evident among businesses, with efforts to reduce expenses driving a further reduction in staff numbers in July.

“Despite the current challenging demand environment, firms were more upbeat when looking ahead. Optimism regarding the 12-month outlook for output rose to the highest level in nine months, with firms in the South West also more positive than the average UK company. A rebound in customer demand, new product launches and increased investment were all expected to drive growth over the next year.

“While cost pressures remained sharp in the South West – and indeed across the UK as a whole – the rate of inflation softened for the third straight month, adding to hopes headline inflation will also ease.

“Nevertheless, firms continued to hike their selling prices in order to help support their margins.”

Latest: South West business activity expands at quickest rate for a year