The headline NatWest Wales PMI® Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – posted at 50.8 in April, up from 50.3 in March, to signal the fastest upturn in output for a year. Although only marginal, growth in activity was linked to greater new order inflows and increased customer confidence. Nonetheless, the pace of expansion was both below the series’ long-run average and much weaker than the UK trend.
Private sector firms in Wales registered back-to-back expansions in April, following a solid upturn in March. An uptick in customer confidence and increased marketing spending reportedly drove the latest rise in new orders. Although the pace of growth eased from that seen in March and was slower than the series trend, it was the second-fastest in a year.
That said, of the 10 UK areas that recorded an increase in new sales, only Scotland registered a slower expansion.
Business confidence among Welsh private sector companies improved at the start of the second quarter, as firms anticipate greater output in the next 12 months. The uptick in optimism was underpinned by hopes of new customer wins and stronger client demand, according to panellists. Expectations rose to the second-strongest in a year.
The level of positive sentiment was lower than the UK average, however.
Staffing levels at Welsh businesses were broadly unchanged on the month at the start of the second quarter, following a marginal expansion in employment in March. The broad stagnation in workforce numbers was in line with the trend seen across the UK as a whole, however. Companies noted that although new hires were required to accommodate greater new work intakes, voluntary leavers were often not replaced in a bid to cut costs.
Welsh private sector firms recorded a further fall in outstanding business in April, with the pace of decline quickening from March. Some firms stated that relatively subdued new order inflows allowed them to process incomplete business in a timely manner. Although the pace of contraction was the second-slowest since February 2023, it was the second-fastest of the 12 monitored UK areas (slower only than the decline seen in Yorkshire & Humber).
Welsh private sector firms signalled a steeper rise in input prices at the start of the second quarter. The rate of cost inflation accelerated to the fastest since last May, and was quicker than the series average. Moreover, the pace of increase was broadly in line with the UK average.
Alongside greater raw material prices, firms attributed higher input costs to an increase in the National Minimum and Living Wages.
April data indicated a further sharp increase in output charges set by Welsh businesses. The rise in selling prices was attributed to the pass-through of higher costs to customers. Although easing to the slowest in three months, the pace of charge inflation was above the series average and only slightly weaker than the trend seen across the UK.
Jessica Shipman, Chair, NatWest Cymru Regional Board, commented:
“April data signalled a sustained rise in new business at Welsh companies, as demand conditions strengthened again. Although the pace of expansion eased, growth supported a faster upturn in business activity – and one that was the sharpest in a year. Moreover, business confidence in the year-ahead outlook picked up to the second-highest for a year amid hopes of further improvements in customer demand.
“Wage pressures drove cost inflation in April, as a larger increase in the minimum and National Living Wage pushed total input prices up at the fastest rate since May 2023. Firms were largely able to pass through higher costs to customers, however, as charges rose at a further elevated pace.”
