Business activity in the south west region fell last month at its fastest pace for more than six years, research suggests.

The latest NatWest PMI survey also found that new orders declined at an even steeper rate amid Brexit uncertainty.

There were more signs of spare capacity in the private sector, with the amount of outstanding work falling at the fastest rate so far this year.

However, companies also raised their staffing levels slightly. Input costs rose by the lowest amount for 32 months, but output charges rose at a steeper rate.

The headline South West Business Activity Index – which measures the combined output of the region’s manufacturing and service sectors – fell from 49.6 per cent in April to 48.9 per cent in May. Although only a marginal fall, it was the lowest reading since February 2013.

Chris Preston, chair of the NatWest South West regional board, said: “South West private sector companies had a disappointing month in May, with the latest NatWest PMI data showing the quickest drop in business activity for over six years amid a further decline in new business. Firms frequently cited that economic and political uncertainty continued to act as a headwind to growth, while others claimed sales were hampered by stockpiling efforts among clients in the opening months of the year.

“Encouragingly, companies added to their payrolls for the first time in four months, while input price inflation edged lower. Businesses also remained optimistic that output would rise over the coming year, with hopes that market confidence will soon be restored, which is anticipated to help new business recover.”

The weaker business was widely linked by firms to lower new orders, NatWest said. The reduction in new business was the quickest since July 2016.

Survey respondents said Brexit-related uncertainty had weighed on sales in May, while orders were affected by stockpiling in previous months.

Higher expenses were commonly linked to greater costs for transport, labour and raw materials. Firms continued to increase charges in an effort to protect margins.

NatWest economist Nick Stamenkovic added: “Business activity posted its biggest contraction in May since February 2013 as the fall in new orders gathered pace last month, on continued Brexit-related uncertainty. Yet jobs growth resumed in May, led by the service sector.”