Fresh figures on the experience of business in Gloucestershire and the Cotswolds suggests the mood music is upbeat, with feedback from purchase managers pointing to "modest" expansion in output.

The latest NatWest Growth Tracker survey charted a flatter rate of increase in business activity across the South West in May. But with a final figure of 51.3 (down from 51.9 in April), May's score meant feedback remained above the crucial 50.0 level – the number signalling an increase in output for the fifth month in a row.

The bank's update said: "The rate of expansion was modest and the softest seen since February. Higher output was generally linked to company expansion plans, improved marketing strategies and work on previously secured orders. That said, there were also reports that more cautious spending among customers had dampened overall growth."

Private sector companies across the South West continue to highlight challenging demand conditions during May, the data suggests: notably, overall new business fell for the second month in a row and at a slightly faster rate than in April.

The bank added: "Although new orders fell again in May, companies across the South West expressed greater optimism towards the year ahead. The overall degree of positive sentiment was the highest since last October and stronger than the UK-wide average."

Faye Long, chair of NatWest's South West Regional Board, said: "The latest growth tracker showed a further increase in business activity across the South West during May, with the region continuing to perform strongly compared to most other areas across the UK."

But she added that ongoing uncertainty over US trade tariffs and the wider global economic climate continued to impact demand: "Notably, firms saw sales weaken for the second month in a row."

She added: "Combined with sharply rising costs, businesses trimmed their staff numbers again to help reduce expenses and adjust capacity in line with current customer demand. Moreover, the South West saw the steepest increase in costs of all 12 UK regions and nations in May."

Despite these challenging conditions, it was encouraging to see businesses were able to look ahead with greater optimism, the report added.

Firms in the South West emerged among the most upbeat of all 12 UK regions and nations when assessing the one-year outlook for output. Opportunities for growth were linked to forecasts of stronger economic conditions and greater confidence among clients to commit to new projects. New product launches and greater investment are also expected to drive increases in activity over the next year.