Business confidence across Wales gained further momentum in December and ticked up to a ten-month high while business activity fell only slightly amid a renewed increase in new orders, according to the latest Cymru Growth Tracker data from NatWest.
At 49.4 at the end of the year, the headline Wales Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the area’s manufacturing and service sectors – was up from 46.8 in November and signalled the slowest decrease in output in the current four-month sequence of decline. The softer contraction in output was supported by a fresh rise in new orders in December. The upturn was modest and the first in six months.
Meanwhile, employment fell again, nonetheless, amid previous declines in new sales and signs of excess capacity.
Following a decrease in November, output charges rose at the end of the year, and at the quickest pace in seven months. Higher selling prices were a response to a steeper uptick in input costs.
Jessica Shipman, Chair, NatWest Cymru Regional Board, said:
“The Welsh private sector showed signs of improvement as the year was brought to a close, with a renewed expansion in new business. Although output continued to decline, the pace was only marginal amid stronger demand conditions. Meanwhile, employment contracted again but at a slower pace as job shedding was eased amid signs of a recovering sales environment.
“Firms were also more upbeat in their expectations for 2026, as business confidence jumped to a ten-month high. Businesses were buoyed by an improvement in new business, with more upbeat demand conditions also supporting a fresh increase in output charges. Cost burdens rose at a sharper pace, but an accommodative sales environment enabled companies to hike selling prices at the fastest rate since May 2025.”
Performance in relation to UK
December data signalled a further decline in business activity at Welsh firms, but the pace of contraction slowed to the slowest in the current four-month sequence of decrease. The fall in output contrasted with the UK average which pointed to a modest increase.
Welsh private sector firms signalled a renewed expansion in new business at the end of the year. Growth in new orders was modest overall, with the latest increase the first since June 2025. Panellists noted that the upturn stemmed from stronger client demand and successful advertising campaigns. The rate of increase was in line with the UK average.
Business confidence at Welsh companies gained further momentum during December, as the degree of optimism rose to the highest since last February. Positive sentiment was linked by firms to hopes of strengthening customer demand, investment in advertising and expanding capacity, and outreach to clients in new markets. Despite rising, output expectations were weaker than the UK trend.
December data signalled a solid but slower rate of contraction in staffing numbers at Welsh firms. That said, the pace of job shedding was less marked than the UK average. Anecdotal evidence continued to note that previously subdued client demand led to a reduction in both full- and part-time workers, with many still prioritising cost-cutting initiatives.
As has been the case since May 2022, Welsh private sector firms indicated a fall in incomplete business again in December. The pace of depletion was marked, but slowed notably from November and was the weakest since June 2025. Nonetheless, Welsh businesses recorded the strongest decline in unfinished work of the 12 monitored UK areas.
Average cost burdens at Welsh private sector firms rose again at the end of the year. Moreover, the pace of input price inflation quickened to the sharpest since August 2025. Higher operating expenses were commonly attributed to greater food, energy and transportation costs. The rate of increase in input prices was broadly in line with the UK average.
Amid a faster hike in input prices and buoyed by stronger demand conditions, Welsh firms raised their output charges in December following a slight drop in the previous survey period. The rate of selling price inflation was steep overall and the quickest since May 2025. As well as being sharper than the long-run series average, the pace of increase was more marked than the UK trend.
