February's PMI Business Survey Data for the south-west, produced for RBS by NTC Economics, showed the region's private sector economy continued to grow in January - albeit at a slower rate.
Cost inflationary pressures remain above that of the UK as a whole, although growth eased to a two-year low.
Despite the slightly lower activity level, new business picked up and employment growth edged higher.
Inflationary pressures remain severe, with firms reporting a survey record increase in their average costs.
The report showed that the seasonally adjusted Business Activity Index, which read 53.7, continues to point towards a solid rate of growth, albeit slightly lower than in December (55.3) and the lowest level since November 2005.
Continued growth of employment in the south-west is helping to reduce the level of unfinished business.
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In January, the business outstanding index fell to 44.9, the sharpest decline in just over two-and-a-half years.
The fall was broad-based, across manufacturing and services.
Companies in the south-west continued to recruit additional staff in January, in line with growth of incoming new business and on-going growth of activity.
The rate of expansion picked up from December's low, but it remained well below those seen during 2007.
The level of new business placed with firms in the south-west rose to 52.4 in January - slightly ahead of the UK average (51.6).
Input price inflation accelerated sharply in January to reach the highest level in the survey's history (69.5 from 65.3).
Price pressures also rose elsewhere in the UK, but at a less rapid rate (65.4 from 64.1).
There were reports of higher prices for a number of inputs, including oil, energy and food stuffs.
Firms continued to pass on some of their higher costs to customers by increasing output prices in January, indicating that profit margins continue to be squeezed.
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