Business activity reaches two-year high in the West Midlands
Private sector business activity in the West Midlands grew at its fastest rate in almost two years in January, latest figures have shown.
The latest Lloyds Bank Regional Purchasing Managers’ Index (PMI) survey showed the West Midlands PMI posted 60.1 in January – a 22-month high and up from 58.7 in December.
The figure is the highest of all the UK regions. Any reading of above 50 signifies expansion in business activity, while a reading below that level signals contraction.
The region’s firms also saw a boost in their order books, with the rate of new business growth at its highest since March 2015. As a result, job creation accelerated since December.
However, despite a largely positive economic landscape for the West Midlands, inflation continued to build in the region during January. Input costs – including staff wages and raw materials – grew at a three-month high, leading to the steepest rise in prices charged for goods and services since May 2011.
The Lloyds Bank PMI is considered the leading economic health-check of UK regions. It is based on responses from manufacturers and services businesses about the amount of goods and services produced during January compared with the previous month.
Mark Cadwallader, regional director for the West Midlands, Lloyds Bank Commercial Banking, said: “West Midlands performed the best out of all UK regions in January in terms of output and new orders, as growth accelerated to its fastest rate in almost two years.
“While the weak pound continued to help firms secure new business opportunities overseas, it also led to further hikes to input costs, particularly for manufacturers. Companies were able to pass on higher costs to their clients, but if this continues firms may lose clients if they are unable to afford the increased charges.”
Professor Julian Beer, Deputy Vice-Chancellor at Birmingham City University, added: “For the sixth consecutive month the West Midlands PMI has recorded firm growth, and in January the region has again recorded growth exceeding that nationally.
“Sustaining this trend needs to become a major focus of policy. With the formal labour market again registering heightened demand, a focus on enhancing the skills base, both in terms of improving the technical skills of those currently employed as well as of providing a route for those currently excluded or under-employed, will be increasingly necessary.”
