New business growth reaches seven month high

NEW business growth in the West Midlands reached a seven month high in November, helping to offset a small decline in the overall level of business activity in the region.

The latest West Midlands Business Activity Index – or Purchasing Managers Index (PMI) – shows the level of activity fell to 54.5 in November compared with 55.6 the previous month.

The PMI is one of the most important economic barometers for the region and measures the combined output of the region’s manufacturing and service sectors.

Any figure above 50 suggests a growing economy.

The data collected for the index, now sponsored by Lloyds TSB, also shows incoming new work rose at the fastest pace for seven months during November. This bodes well for business growth over the next few months and a rise in employment to a four-month high is also seen as a significant factor in helping to stimulate growth, with the extra workers helping firms boost their capacity.

The index shows there was also evidence of growing inflationary pressure, with both input and output prices rising at faster rates.

Output in the private sector rose for a 17th consecutive month in November, slightly ahead of the UK average. Growth of activity was driven by the manufacturing sector, where robust increases in production were recorded. In contrast, service providers saw reduced activity.

“West Midlands firms benefited from stronger demand in November as the level of incoming new business placed with companies across the region rose at the fastest pace for seven months. Anecdotal evidence linked the latest growth of new orders to improving market conditions and higher activity at clients,” stated a report accompanying today’s index results.

Andy Youngman, area director for Lloyds TSB Commercial in Birmingham, said the pickup had contributed to a further solid expansion of the private sector.

“The region continued to benefit from its relative strength in manufacturing, as growth in that sector was supported by reports of strengthening export demand and client stock building,” he said.

“In contrast, service providers remained under pressure amid domestic economic uncertainties and public spending cuts. With this divergence in sector performance firmly established at the national level, the West Midlands appears better placed than many other UK regions in its near-term growth outlook.”