Confidence boosted as West Midlands output outstrips rest of the UK

OUTPUT growth in the West Midlands accelerated to a 21-month high in January outpacing the rest of the UK and ushering in new levels of confidence.

Latest PMI data also shows employment rose last month, again at the sharpest rate in the whole country.

The headline Lloyds TSB West Midlands Business Activity Index – which tracks the combined output of the region’s manufacturing and service sectors – reached 58.8 in January, up from 54.0 in the previous month.

The service sector registered the faster rate of increase and the current sequence of expansion now extends to 31 months.

Underpinning growth activity was a strong and accelerated rise in new business. Also, higher workloads encouraged companies to take on new staff to meet demand.

In addition to this, modest increases in both input and output prices were recorded.

New business received by West Midlands companies rose at a marked and accelerated pace. There were reports of stronger demand conditions and restocking at customers as factors supporting the latest increase in new work.

Staffing levels increased, with job creation quickening to a four-month high. The manufacturing sector was the principal driver of jobs growth as higher workforce numbers helped West Midlands firms deal with the dual demands of new and existing business.

Backlogs of work decreased marginally in January following a slight rise in December.
Input price inflation in the West Midlands private sector eased further last month and the latest increase in costs was only marginal and the weakest in the current 30-month period of inflation.

Output prices rose at a slightly faster pace in the latest survey period. However, the rate of increase was modest and remained below the survey’s long-run average.

David Garbutt, area director for Lloyds TSB Commercial in the West Midlands, said: “January’s PMI figures signalled a promising start to 2012 for the West Midlands’ economy. Private sector output rose at the fastest pace for 21 months, propelling the region to the top of the UK regional growth rankings.

“With firms reporting a marked expansion in incoming new business, supported by improved client demand, job creation in the region received a boost, and employment increased at the fastest rate across the whole of the UK in the latest month.”