
The headline NatWest South East Growth Tracker 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 – fell from 54.3 in August to 51.2 in September.
Panellists linked the upturn to increased confidence in the market given steady inflows of new work.
Growth was reportedly constrained by caution ahead of the Autumn Budget and a softer expansion in sales. The latest increase was the slowest across the third quarter.
September data pointed to a further rise in new business volumes across the South East private sector. Panel members often mentioned that they had secured new contracts. Though moderate, the rate of expansion was the softest across the third quarter.
The seasonally adjusted Employment Index for the South East posted just below the crucial 50.0 mark in September for the first time this year so far.
The rate of job shedding was only marginal, however. Some panellists linked the downturn to the non-replacement of leavers, often due to having excess capacity.
There was a further substantial rise in operating costs faced by private sector firms in the South East in September.
In anecdotal evidence, businesses frequently blamed increased wage costs. The rate of input price inflation was the strongest since May but remained just below the long-run average.
Catherine van Weenen, territory head of commercial mid market at NatWest, said: “September NatWest Growth Tracker data confirmed another quarterly improvement in activity across the South East.
“Output remained on a growth trajectory, in part due to the healthy pipelines of new business.
“That being said, rates of expansion slowed in each case. Nevertheless, of the 12 UK areas, the South East was the most upbeat towards the future outlook.
“Firms reacted to ongoing signs of spare capacity by holding off on replacing of leavers. Employment levels fell for the first time in 2024 so far, which should help to protect profit margins.
“Though businesses faced stronger cost pressures, the inflationary environment was subdued compared to the UK average.”
Rates of activity and new business growth in the South East were slower than the UK averages.
The level of outstanding business at South East firms decreased again in September, thereby extending the trend of continuous decline seen since mid-2023.
Companies reportedly had sufficient capacity to run down their backlogged orders. The rate of reduction was moderate and slightly slower than that seen in August. Unfinished orders were depleted at a faster rate in the South East compared to the UK average.
Half of the 12 UK areas posted job cuts, while growth was reported elsewhere. Having registered a marginal drop in headcounts, the South East fell behind the UK average (where marginal growth was signalled).
South East private sector companies registered a softer rate of cost inflation compared to the national average.
Nevertheless, ongoing increases in input costs underpinned a further uplift in charges set for South East goods and services in September.
As the rate of charge inflation was unchanged from August, it therefore remained the joint-least pronounced since January 2021. The rate at which average selling prices increased was also largely in line with the national average.
Finally, firms across the South East remained optimistic toward their growth prospects for the next 12 months in September.
In fact, the degree of positive sentiment was the joint-strongest since February (level with July). New product launches, increased marketing and hopes of improved economic conditions were reasons for positive sentiment cited in panel member reports.
South East businesses also expressed the greatest degree of optimism of the 12 monitored UK areas.