New PMI data shows region’s economy remains volatile
FURTHER evidence of the volatility in the West Midlands economy has been evidenced in the latest regional Purchasing Managers Index (PMI).
The report, issued in collaboration with Lloyds TSB, shows production bounced back last month following May’s eight-month low.
Economists had been predicting the move and said the fluctuations, caused by the series of bank holidays and long lay-offs, only served to highlight how difficult it was to garner a true picture of the health of the economy.
The index headline rate for June was 54.8, a 0.8 point rise on May but still well below the 57.5 rate in April. However, the figures illustrate there is still growth in the economy although by exactly how much probably won’t be clear until later in the year.
The June figure was the second lowest of 2011 but it was still higher than the long-term average (52.6) and above all other areas of the UK with the exception of London and the South East.
David Garbutt, area director for Lloyds TSB Commercial in Birmingham, said: “West Midlands private sector output grew at a solid and slightly accelerated pace in June that was above the UK-wide average.
“A strong rise in new business received by goods producers provided a boost to the region, while lacklustre demand in the service sector reined in overall growth. Labour market conditions benefitted from the overall rise in activity, with the rate of job creation higher than in any other region. Cost pressures meanwhile remained elevated, despite easing again during the month.”
The main factor in last month’s rise was an acceleration of new business. New contracts in the West Midlands have risen steadily since July 2009, and the rate of increase was strong in relation to historic survey data.
Overall trends in activity and new business masked differences in performance between manufacturing and services in June. In manufacturing, sharp gains were recorded, while in the service sector new work and activity levels both fell.
Private companies in the West Midlands took on more staff in June for the 16th time in 17 months. For the past five months, the region registered a higher rate of job creation than all other UK regions.
The trend was for manufacturers to take on staff but for service providers to shed staff.
Backlogs of work fell for the fifth month running, while input price inflation eased to a sixth-month low – although the rate still remains high, with fuel and raw materials still proving more expensive than last year.
Higher input costs led firms to raise prices for goods and services.