• Swindon & Wiltshire Economy
• Wednesday August 12 2026

South West businesses return to growth

South West businesses made a positive start to the second half of 2026, with both business activity and new orders returning to growth in July.

The latest NatWest South West Growth Tracker showed the region’s Business Activity Index rose to 50.8, up from 47.6 in June, signalling the first increase in output for three months.

New business also increased for the first time since February, pointing to a modest improvement in demand.

While inflationary pressures remained a challenge, both input cost and selling price inflation eased during the month.

Employment levels fell for a third consecutive month, but the pace of job losses slowed notably from June.

Although overall business confidence remained below long-run averages, firms were more optimistic than in the previous month as demand conditions improved and cost pressures showed further signs of easing.

Faye Long, Chair of the NatWest South West Regional Board, said: “After a difficult first half of the year, July brought some welcome signs of momentum for South West businesses. Output and new orders both returned to growth, suggesting firms are seeing demand begin to improve as we move into the second half of 2026.”

“While challenges remain, particularly around inflation and global uncertainty, businesses are showing resilience and adapting well. It’s encouraging to see cost pressures continue to ease and employment trends stabilise.”

“Looking ahead, there is cautious optimism across the region. Many firms believe the worst of the cost pressures may now be behind them, creating a stronger platform for investment, growth and greater confidence in the months ahead.”

Nationally, business activity also returned to growth across the UK in July.

New business growth in the South West broadly matched the UK trend. The region recorded one of the stronger performances across the UK, with only London and the South East reporting faster growth in activity.

Employment continued to decline in the South West, though at a slower rate than in June and less sharply than the UK average.

Input costs continued to rise at a faster pace than the UK average, while the rate of increase in prices charged by South West firms was softer than the national trend.