Spring brings job creation and output growth for WM firms
West Midlands companies welcomed a further expansion in new business intakes with another round of job creation and output growth, latest figures show.
The NatWest PMI shows that input cost inflation softened in April, but demand resilience facilitated a sharper increase in output charges. The headline Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – rose fractionally from 52.7 in March to 52.8 in April, signalling a solid rate of growth. Anecdotal evidence linked the latest upturn to greater client spending, successful marketing efforts, new business wins, improved consumer footfall and acquisitions. That said, the overall rate of increase in local output was below the national average.
Private sector companies in the West Midlands noted a third successive rise in new business intakes during April, which they attributed to a pick-up in demand and improved footfall. Little-changed from March, the overall rate of expansion was marked and above its long-run average. That said, growth in the West Midlands was below the UK average, with the region placed fifth in the regional rankings for new orders.
In line with sustained increases in new business and upbeat growth projections, West Midlands companies raised payroll numbers at the start of the second quarter. The latest upturn in jobs was solid and considerably stronger than March’s 25-month low. Regionally, the West Midlands came seventh in the rankings for employment trends.
West Midlands firms noted another increase in their expenses during April, which they associated with greater beverage, food, freight, insurance, material and staff costs. The upturn was also partly attributed to unfavourable exchange rate movements and higher energy costs. Although historically high, the overall rate of inflation softened to its weakest in close to two-and-a-half years. Some panellists linked the slowdown to lower raw material prices. Regionally, only the North West saw a weaker rate of input cost inflation than the West Midlands.
Ongoing cost rises, wage pressures and demand resilience underpinned a further increase in prices charged for goods and services across the West Midlands. Moreover, the rate of charge inflation was sharp, faster than in March and well above its long-run average. In contrast to the trend seen over the past six months, the local rate of charge inflation was below the national average in April.
April data highlighted another fall in unfinished business levels at West Midlands firms, stretching the current period of depletion to five months. Although the fastest since January, the overall pace of contraction was only moderate. Where a decline was reported, panellists mentioned successful recruitment, overtime and efficiency gains.
West Midlands firms were strongly optimistic towards output prospects. Despite slipping to a three-month low in April, the overall level of positive sentiment remained well above its long-run average. Optimistic forecasts stemmed from new sales opportunities, expanded capacities, product diversification and expectations of better global trading conditions. Local companies were the most upbeat out of the 12 monitored UK regions with regards to the year-ahead outlook for business activity.
