Welsh firms cut jobs as business confidence falls to 10-month low

Mark Mansfield

Welsh businesses continued to increase their output in August, but falling orders and further job cuts pointed to continuing weakness in the economy.

The latest NatWest Cymru Growth Tracker found business activity increased for the second month running, although growth remained weaker than the UK average.

Its Wales Business Activity Index recorded a reading of 50.4 in August, down slightly from 50.5 in July. A figure above 50 indicates increasing activity, while one below 50 signals a decline.

Despite the marginal growth, new orders fell for the seventh consecutive month and at a faster rate than in July.

That contrasted with the UK as a whole, where businesses reported a slight increase in new orders.

Welsh firms also continued to reduce their workforces, extending a period of job losses which began in September 2024.

The rate at which jobs were cut accelerated in August and was the fastest among the 12 UK nations and regions covered by the survey.

Businesses also reported a further reduction in outstanding work, suggesting firms had spare capacity as new orders declined.

Confidence about the year ahead remained positive but fell to its lowest level since October 2025.

Wales recorded the second-lowest level of business optimism among the 12 areas surveyed, with only Northern Ireland reporting weaker confidence.

Jessica Shipman, Chair of the NatWest Cymru Board, said: “Welsh businesses saw further output growth in August, but demand conditions remained challenging.

“Firms were able to work through their backlogs with little strain on capacity, as the pace of decline in new sales gained speed.

“Hesitancy to spend on non-essential purchases and uncertainty at customers also dampened business confidence which slipped to a 10-month low.”

Rising costs

Businesses also reported rising costs during August, with the rate of increase accelerating slightly from July.

However, cost pressures remained below the levels recorded between March and June, while the increase was also weaker than across the UK as a whole.

Prices charged by Welsh businesses increased at a slightly faster rate than in July and broadly in line with the UK average.

Ms Shipman added: “Companies continued to prioritise cost-cutting efforts amid a slight hike in cost inflation. Employment fell at a sharper rate as uncertainty in the outlook dampened hiring intentions further.

“That said, although sharpening, the quicker pace of cost inflation was met by a similar acceleration in the rate of increase in selling prices as firms sought to protect margins.

“Inflationary pressures were also much less marked than seen in the second quarter, offering some respite from the substantial price hikes seen earlier in the year.”

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