Business confidence at Welsh firms improved midway through the fourth quarter, according to the latest Cymru Growth Tracker data from NatWest, despite contractions in output and new orders.
At 46.8 in November, the headline Wales 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 – was down from 48.5 in October and indicated a solid fall in output levels across the private sector.
Although input prices rose at a slightly quicker pace, firms lowered their selling prices in a bid to boost new sales. Encouragingly, Welsh firms were confident of a rise in output over the coming year in November, with the degree of optimism rising from the previous survey period.
Sebastian Burnside, Chief Economist of NatWest Group, summarises the latest NatWest Cymru Growth Tracker report’s findings for Business News Wales:
Jessica Shipman, Chair, NatWest Cymru Regional Board, said:
“November data indicated challenges for the Welsh private sector in the near-term, but greater confidence in the outlook for output over the coming year. Output, new orders and employment fell but the level of spare capacity eased as backlogs declined at a softer pace.
“On the price front, Welsh businesses sought to set their output charges at a competitive level as selling prices fell for the first time in five-and-a-half years. The decrease in output prices came despite a sharper rise in cost burdens amid higher wage bills and hikes in raw material and transportation fees.
“Nonetheless, businesses noted stronger expectations for the year ahead amid hopes of improved demand conditions and planned investment in outreach to new export customers.”
In contrast to a marginal expansion seen at the UK level, Welsh firms recorded a faster fall in business activity during November. Moreover, the rate of decline was the fastest of the 12 monitored UK areas.
November data signalled a fifth successive monthly decrease in new business received by Welsh private sector firms. The rate of contraction accelerated fractionally and was solid overall. Of the 12 monitored UK areas, only the East Midlands and North West registered sharper declines in new orders.
Nonetheless, Welsh businesses were more confident of a rise in output over the coming year in November than in the previous survey period. Anecdotal evidence suggested that optimism stemmed from planned expansions into new export markets and investment in new marketing initiatives. Despite improving, Welsh firms recorded the second-lowest level of positive sentiment of the monitored UK areas (stronger than Northern Ireland only).
Welsh businesses recorded a further decrease in employment midway through the fourth quarter. Although the pace of job shedding quickened, it was among the weakest in 2025 to date and slower than the UK average.
As has been the case since May 2022, Welsh firms registered a decrease in backlogs of work in November. The depletion of incomplete business reportedly stemmed from a reduction in new sales and sufficient capacity. The rate of decline was quicker than the UK average but eased to the slowest for four months.
November data signalled a renewed decline in output charges at Welsh firms, and the first in five-and-a-half years. The decrease was only slight, but indicated a contrast to the modest uptick seen in October. Of the 12 monitored UK areas, only the North East recorded a sharper drop.
The increase in cost burdens, meanwhile, was marked and quicker than the series average. Higher wage bills and greater costs for raw materials, transportation and freight were all reportedly drivers of inflation. The pace of increase was softer than the UK average, meanwhile.
