South West business confidence picked up last month despite new business orders falling at the quickest rate for more than 10 years, new data has revealed.
There was a deterioration in business conditions across the region but optimism among companies increased, according to the latest NatWest PMI survey.
Firms are expecting activity to rebound in the months ahead, which could support a modest increase in staff numbers.
But growth forecasts are largely contingent on conditions recovering after the election and reduced uncertainty surrounding Brexit.
The headline South West Business Activity Index – a seasonally adjusted index measuring the combined output of the region’s manufacturing and service sectors – registered 48.0 in November, down slightly from 48.2 in October.
The figure highlighted the ninth successive monthly fall in business activity across the region. Though moderate, the decline was quicker than seen across the UK as a whole.
Lower intakes of new orders enabled firms to work through their outstanding business and the rate of backlog depletion was the steepest recorded since February 2013.
'The South West struggled in November'
At the same time, hopes that business activity will improve over the coming months led to an increase in staff numbers for the second month in a row.
Chris Preston, chair of NatWest's South West regional board, said: “The South West struggled in November, as demand conditions weakened markedly ahead of the election and due to uncertainty around Brexit.
"Notably, survey participants saw the steepest drop in new work for over ten years alongside a further fall in activity levels, to underscore how difficult the business environment currently is.
“Despite reductions in output and new work, optimism regarding the year ahead improved in November, with firms also adding to their payrolls for the second month in a row.
"However, positive forecasts were largely contingent on a rebound in new business once there is greater clarity around the outlook.”
