Business activity in Wales rose at a quicker pace than any other UK region for the second consecutive month in October, boosted by the fastest rise in new orders in two-and-a-half years, the latest Lloyds Bank PMI report has revealed.

The Wales PMI posted a reading of 58.6 in October up from 56.2 in September, showing the biggest rise in business activity in nine months for the home nation. A reading of above 50 signals expansion in business activity and below 50 signals contraction.

The rise in activity was largely down to an increase in new orders, which grew at the quickest rate since April 2015. As a result, firms continued to take on new staff for the 20th successive month.

Continued growth also meant that firms across Wales remained confident about their prospects over the coming 12 months, although the degree of optimism was slightly less than in September.

Input costs – including the price of raw materials and wages – continued to put pressure on companies across Wales, rising for the 24th month running. This was passed on to customers in the form of higher selling prices.

The Lloyds Bank PMI, or purchasing managers’ index, is the leading economic health-check of UK regions. It is based on responses from manufacturers and services businesses about the volume of goods and services produced during October compared with a month earlier.

Allan Griffiths, regional director for SME Banking, Lloyds Bank Commercial Banking, said: “Welsh companies have started the final quarter of the year on a high, with business activity growth nearing the record levels previously seen in 2014.

“This has led to continued confidence across the country, and it’s positive to see that Welsh businesses are optimistic about what 2018 has in store.

“However, with the weak pound continuing to impact input costs, it’s vital that firms continue to plan effectively over the coming months, ensuring that they have enough working capital available to navigate any challenges and build on their successes.”