Slower growth but West Midlands still above UK average
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Firms in the West Midlands experienced the slowest increase in business activity in over a year during September, new figures have shown.
Nevertheless, growth in the region remained above the UK average, the latest Lloyds Bank Regional Purchasing Managers’ Index (PMI) survey concludes.
The West Midlands business activity PMI registered at 55.2 in September, down from 58.6 in August. Any reading above 50 shows an expansion in output.
The UK average reading was 54.1.
Businesses in the West Midlands also experienced a steep rise in new orders, as new customers boosted order intakes. Firms also took on more staff at a faster rate than than the national average in order to satisfy the growing demand.
Business confidence remained high, with firms introducing new products and expecting increased sales over the next 12 months. However, the level of optimism was slightly lower than in August.
Meanwhile, unfavorable exchange rates contributed to higher input costs for firms. The increased cost burdens were partly passed on to customers through higher prices charged for goods and services.
The Lloyds Bank PMI is based on responses from manufacturers and services businesses about the amount of goods and services produced during a given month compared with the previous month.
Mark Cadwallader, regional director for SME banking in the West Midlands at Lloyds Bank Commercial Banking, said: “West Midlands companies finished the third quarter with a solid expansion in business activity, however it was marked by its slowest growth in 13 months. Nevertheless, robust growth in activity and new orders helped to boost job creation, which were higher than the national level.
“As we enter the final quarter of 2017, we start the countdown to the Christmas holidays. Businesses in the consumer goods and hospitality sectors will need to ensure they manage their working capital carefully, in order to take advantage of increased demand from events like Black Friday, Christmas and New Year.
“Last month our Working Capital Index report found that businesses in the West 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.”