Business activity in the south west has gone from growth to contraction, according to the Lloyds Bank Regional PMI.
The data, which is the first indicator of regional business activity since the Brexit vote, revealed that business activity in the region slumped in July. New business orders also fell at their sharpest rate since 2009.
Despite this, the decline in business activity was slower than the UK average, and private sector companies in the region increased their workforces in July. This follows a slight drop in employment during June.
The South West’s PMI registered 49.5 in July, down from 53.4 in June. A reading below 50.0 indicates contraction.
The Lloyds Bank Regional PMI, or Purchasing Managers’ Index, is a leading economic health-check of UK regions. It is based on responses from manufacturers and services businesses about the value of goods and services produced during July compared with a month earlier.
Meanwhile, business price inflation in the region was linked to fuel, salaries and the impact of the weaker sterling exchange rate.
David Beaumont, regional director for the south west at Lloyds Bank Commercial Banking, said: “July data showed that south west’s businesses suffered a downturn in activity, but this decline was wasn’t as severe as other regions in the UK.
“Despite a sharp fall in new business, it is too early to say what impact this could have long term, given the degree of uncertainty around the timing and terms of the UK leaving the EU.”