West Midlands output rises to seven-month high
THE West Midlands saw output rise in September as new business growth reached a seven-month high.
Robust expansion in new business supported solid activity growth, while employment rose at the strongest pace of all the UK’s regions. In addition, backlogs of work fell at their sharpest rate since November 2009.
The situation is outlined in the latest Lloyds TSB West Midlands PMI® report. The report concludes business activity accelerated to a solid pace in September, underpinned by a marked increase in new orders. Correspondingly, employment rose at a stronger rate that was the fastest of all the UK regions.
Last month also saw slower inflation of input costs, while output charges continued to rise solidly.
Business activity increased for a 27th consecutive month in September. The headline Lloyds TSB West Midlands Business Activity Index – which tracks the combined output of the region’s manufacturing and service sectors – posted 53.9, up from 50.9 in August. That was marginally above the all-UK figure.
Data showed that the service sector was the principal driver of expansion during the latest survey period.
Supporting output growth was a stronger rise in the level of new business placed with the West Midlands private sector companies during September. The latest increase in new work was the sharpest in seven months and the second-fastest recorded across all UK regions.
West Midlands firms responded to higher activity and new business by hiring additional workers in September. Employment growth quickened to a three-month high and was stronger than in any other UK region. Increased staffing levels helped firms make further inroads into their backlogs of work.
A decline in outstanding business was recorded for the eighth consecutive month in September, and at a sharper rate than recorded across the UK as a whole.
Although input prices in the West Midlands private sector continued to rise in September, the rate of inflation eased to a 10-month low. There were reports linking the weaker increase in costs to lower prices for certain metals.
Prices charged by West Midlands firms rose at a solid pace in September that was little-changed from the previous month. The latest increase in selling prices was again well above the UK average.
David Garbutt, area director for Lloyds TSB Commercial in the West Midlands, said: “The West Midlands saw a welcome pick-up in activity growth to a solid pace in September. Furthermore, there were particularly encouraging readings for new business and employment, the latter increasing at the strongest rate of all the UK regions.
“Meanwhile, an easing in cost pressures narrowed the gap between the input and output price indices to the lowest for 10 months, pointing to an alleviation of the squeeze on companies’ profit margins.”
