West Midlands’ output falls but is still the sharpest in the UK

THE West Midlands remained the fastest growing region in the UK in April despite output slipping from March’s high, latest figures show.

The latest Lloyds TSB West Midlands PMI® report shows that the region’s private sector economy continued to expand at a substantial rate in April.

The headline West Midlands Business Activity Index – which tracks the combined output of the region’s manufacturing and service sectors – posted 56.3, down from 60.0 in March. The latest reading was the lowest in four months, but still signalled a rate of growth that was the sharpest of all UK regions.

Although easing from the 54-month high recorded in March, the pace of expansion in business activity at West Midlands companies remained well above its historical average during April.

Higher output was supported by a further increase in new business. The latest increase in new work was again marked, albeit the slowest since December 2011. Panellists attributed the latest rise in new orders to improved demand conditions, rising client activity levels and new product launches.

Job creation in the West Midlands private sector was maintained for a fifth successive month in April, although the latest rise was only slight and the weakest in that period. The increases which did occur were generally attributed to higher workloads.

Backlogs of work grew during the month; the result of sustained growth of incoming new business and resulting pressure on operating capacity. Although modest, the increase in outstanding business was the first in four months.

Input prices faced by West Midlands firms continued to rise in April, although the rate of inflation eased slightly from March’s seven-month high. Raw materials, fuel and energy were cited as having increased in cost during the latest period. The region continued to post a sharper rate of input price inflation than the UK average.

Output prices also rose in April, as firms attempted to offset part of the increase in their input costs. However, the rate of charge inflation eased to a four-month low and only modest overall.

Competitive pressures were cited by firms as a factor weighing on a company’s pricing power.

Andy Youngman, area director for Lloyds TSB Commercial in Birmingham, said: “Business activity growth in the West Midlands private sector remained strong in April, although at a slightly lower rate than seen in the first quarter of the year. Indeed, the region was again at the top of the nation-wide output performance table.

“The sustained rise in workloads continued to support employment growth during the latest month, albeit at a slower pace. Weakness in the Eurozone economy is an obvious concern for the region’s exporters, but overall the latest data continued to paint an encouraging picture for West Midlands firms.”