• Swindon & Wiltshire Economy
• Monday October 19 2026

South West businesses keep growing despite rising costs

South West businesses have recorded a third consecutive month of growth, with output, new work and employment all expanding despite mounting cost pressures.

The latest NatWest South West Growth Tracker shows the region’s headline Business Activity Index stood at 51.5 in September, down from 53.0 in August, but still above the 50 mark that separates growth from contraction.

Firms linked the continued expansion to new projects, stronger client retention, and fresh inflows of work.

New business increased for a third successive month, although at a slower pace than earlier in the quarter. Employment also rose for the second month running, making the South West one of only five UK regions and nations to record jobs growth in September.

Export conditions improved at their fastest rate in more than four years. The South West Export Climate Index reached its highest level since May 2022, reflecting stronger trading conditions across several key international markets.

Faye Long, chair of the NatWest South West Regional Board, said businesses were entering the final quarter of the year from a position of resilience.

“While growth softened compared with the stronger pace we saw during the summer, firms continue to win new work, expand activity and create jobs,” she said.

“It’s particularly encouraging to see employment rising for a second consecutive month and export conditions improving, underlining the strength and adaptability of businesses across the region.”

However, the report also highlights growing pressure on company finances. Input cost inflation accelerated in September and outpaced the UK average, driven by higher raw material, fuel and energy costs. The South West was among the regions most affected by rising business costs.

Many firms responded by raising prices to protect margins, although output price inflation remained slightly below the national trend.

Outstanding workloads continued to decline, suggesting businesses largely had sufficient capacity to meet demand and work through existing orders.

Business confidence eased compared with August and remained below the UK average, but firms still expect activity to grow over the year ahead. NatWest said opportunities linked to exports, AI and defence-related sectors were among the factors supporting optimism.

The South West’s performance was slightly below the UK average for business activity, while new orders rose in line with a modest national increase. Employment fell modestly across the UK overall, contrasting with the region’s second month of hiring growth.

Long said higher costs and global uncertainty continued to create challenges, but businesses were investing in customer relationships and building opportunities.

“Businesses are continuing to grow, invest in customer relationships and build opportunities, putting them in a good position as we head into the final months of the year,” she said.

Image by Boys in Bristol Photography at Pexels