Job creation at three-month high in the East Midlands

Firms in the East Midlands created jobs at the fastest pace in three months during September, as businesses hired additional staff to meet increased demand for goods and services, according to the latest Lloyds Bank Regional PMI survey.

The East Midlands business activity PMI registered at 55.4 in September, but the pace of growth had slowed from August which saw a reading of 57.7. A reading above 50.0 shows expansion in business activity, while a reading below 50.0 indicates contraction.

Firms in the region experienced a rise in new orders from strong client demand and after expanding into new markets. Despite firms hiring additional staff to meet demand, work backlogs continued to rise.

Meanwhile, the rising cost of raw materials, wages and the weakness of the pound resulted in higher input costs for firms. Increased cost burdens were partly passed on to customers through higher selling prices, which rose at the fastest rate for five months.

Business confidence increased slightly in September as a result of higher demand, although East Midlands firms remained concerned over ongoing political uncertainty.

The Lloyds Bank PMI, or Purchasing Managers’ Index, is the leading economic health-check of UK regions. It’s based on responses from manufacturers and services businesses about the amount of goods and services produced during September compared with a month earlier.

Dene Jones, regional director for the East Midlands, Lloyds Bank Commercial Banking, said: “Firms in the East Midlands performed well compared to the national level, with strong expansions in both new business and business activity.

“Meanwhile, September data indicated the fastest rate of job creation for three months. Inflationary pressures intensified further as input cost inflation accelerated to a quick pace that was the fastest in seven months. Notably, business confidence remained relatively subdued following concerns of ongoing political uncertainty.

“As we enter the final quarter of 2017, businesses in the consumer goods and hospitality sectors will need to ensure they have the working capital necessary to take advantage of higher demand from events like Black Friday, Christmas and New Year.

“Last month our Working Capital Index report found that businesses in the East Midlands have £42bn tied up in excess working capital, which includes assets like stock and invoices. Cash that’s tied up in working capital can be released and invested in creating more stock or building capacity to meet higher demand over the festive season.”