Welsh private sector in trouble
Fears about the worsening state of the Welsh economy have been supported by the latest PMI Wales Report from RBS, which showed that the region’s private sector economy was doing worse than ever.
According to this authoritative study, indexes for output and new business both hit new lows in July, and Wales registered the fastest decline in private sector employment of any UK region.
- In July, private sector output in Wales declined for the fifth time in 2008 so far. Moreover, the rate of contraction was the fastest in the history of the survey. The region also fared worse than elsewhere in the UK on average.
- Consumer concerns surrounding the financial and housing markets had an adverse impact on demand in July, as the volume of incoming new business declined at a series record pace. Of the twelve UK regions, only Scotland registered a sharper fall in new business contracts than Wales in the latest survey period.
- In line with the trend since last October, firms operating in the Welsh private sector economy cut staffing levels in July. Moreover, the rate of contraction was greater than in any other UK region and the fastest in the survey history.
- The rate of increase in firms’ average input costs sharpened (for the fifth time in the past six months) to a new survey record. Energy, metals and food were the most commonly reported sources of inflationary pressure.
- A sharp increase in output prices was indicated by the latest survey data as firms attempted to relieve pressure on profits from rising costs. However, the rate of output price inflation was weaker than the UK average. So, relative to nationwide trends, Welsh firms faced above-average increases in costs but raised charges at a comparatively slow rate.
This is quite a damning survey and I would hope that policymakers in wales are looking carefully at these results. Certainly, it would seem that Wales is not, as some politicians have noted, better placed than the other regions within the current bleak economic environment.
Burying one's head in the sand and going on about the thousands of jobs created (usually part-time, low paid and in sectors that are being hit hardest by the credit crunch) will not help the Welsh business sector one iota at a time when it needs the right type of support and encouragement.
The full PMI report for Wales can be read here