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Photo Lauren Hurley\/PA Wire<\/p>\n Photo Lauren Hurley\/PA Wire<\/p>\n
Mark Mansfield<\/p>\n
Welsh businesses continued to increase their output in August, but falling orders and further job cuts pointed to continuing weakness in the economy.<\/p>\n
The latest NatWest Cymru Growth Tracker found business activity increased for the second month running, although growth remained weaker than the UK average.<\/p>\n
Its Wales Business Activity Index recorded a reading of 50.4 in August, down slightly from 50.5 in July. A figure above 50 indicates increasing activity, while one below 50 signals a decline.<\/p>\n
Despite the marginal growth, new orders fell for the seventh consecutive month and at a faster rate than in July.<\/p>\n
That contrasted with the UK as a whole, where businesses reported a slight increase in new orders.<\/p>\n
Welsh firms also continued to reduce their workforces, extending a period of job losses which began in September 2024.<\/p>\n
The rate at which jobs were cut accelerated in August and was the fastest among the 12 UK nations and regions covered by the survey.<\/p>\n
Businesses also reported a further reduction in outstanding work, suggesting firms had spare capacity as new orders declined.<\/p>\n
Confidence about the year ahead remained positive but fell to its lowest level since October 2025.<\/p>\n
Wales recorded the second-lowest level of business optimism among the 12 areas surveyed, with only Northern Ireland reporting weaker confidence.<\/p>\n
Jessica Shipman, Chair of the NatWest Cymru Board, said: \u201cWelsh businesses saw further output growth in August, but demand conditions remained challenging.<\/p>\n
\u201cFirms were able to work through their backlogs with little strain on capacity, as the pace of decline in new sales gained speed.<\/p>\n
\u201cHesitancy to spend on non-essential purchases and uncertainty at customers also dampened business confidence which slipped to a 10-month low.\u201d<\/p>\n
Rising costs<\/p>\n
Businesses also reported rising costs during August, with the rate of increase accelerating slightly from July.<\/p>\n
However, cost pressures remained below the levels recorded between March and June, while the increase was also weaker than across the UK as a whole.<\/p>\n
Prices charged by Welsh businesses increased at a slightly faster rate than in July and broadly in line with the UK average.<\/p>\n
Ms Shipman added: \u201cCompanies continued to prioritise cost-cutting efforts amid a slight hike in cost inflation. Employment fell at a sharper rate as uncertainty in the outlook dampened hiring intentions further.<\/p>\n
\u201cThat said, although sharpening, the quicker pace of cost inflation was met by a similar acceleration in the rate of increase in selling prices as firms sought to protect margins.<\/p>\n
\u201cInflationary pressures were also much less marked than seen in the second quarter, offering some respite from the substantial price hikes seen earlier in the year.\u201d<\/p>\n
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