According to the latest Lloyds TSB South West PMI, the region reported increased business activity in September.
The rate of expansion was modest, but nonetheless improved on the contraction in output recorded in August.
The increase in activity was supported by a stronger rise in new business. However, expansion was largely confined to the manufacturing sector, with service providers noting a decrease in output and a broadly stagnant level of new work intakes.
Growth of overall output supported a marginal increase in employment but, as backlogs declined at a faster pace, indications of spare capacity persisted.
New business received by companies in the south west increased in September, extending the period of sustained expansion to two years. The rate of growth was the strongest since April, but marginally weaker than the long-run trend.
Nonetheless, the rise in new orders supported an increase in output, which returned to growth after a contraction in August. While the expansion was modest overall, it was the strongest in five months.
September data signalled a marginal increase in private sector employment in the south west. However, job creation was largely restricted to the manufacturing sector, reflecting increases in new business and output.
Companies in the south west reported a further increase in input prices during September, attributing this to higher raw material costs as well as rises in wage bills and fuel costs.