A DOWNTURN in economic activity has entered its fifth month, according to the latest business survey by NatWest. 

Its data indicated a contraction in activity across the south west private sector in December.

The findings were part of the NatWest South West PMI 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. 

This index ranked the south west as 47.5 in December, up from 45.3 in November.

The latest reading indicated the slowest rate of decrease in the current five-month sequence of contraction, amid a softer reduction in new orders.

The downturn in business activity across the south west was the third-fastest across the 12 UK regions.

Private sector companies across the south west reported a fall in new business received for the sixth month running in December.

The UK level of employment also fell, for the first time in 22 months, albeit at a softer pace than that seen across the south west.

Paul Edwards, chair of the NatWest South West Regional Board, said: "The year ended with a continued reduction in business activity across the South West during December.

"Albeit the pace of decrease was softest in the five-month period of decrease, it signalled the ongoing worsening of the private sector as incoming new business fell for the sixth consecutive month, with firms also cutting back on staffing levels for the first time since September.

"The overall declining health of the sector reflected the fallback in demand as recession fears, inflation and the cost of living crisis dominated the economic environment for the most part of the second half of the year.

"The outlook for 2023 suggests ongoing challenging conditions across the private sector, but perhaps less so than previously expected, with the month-on-month improvement in business confidence giving at least one sign of slightly more optimism."