Key reports confirm strong growth in West Midlands – with more to come
THE West Midlands is set to experience strong levels of growth during the final quarter of 2013, separate economic studies have shown.
The latest Lloyds Bank Commercial Banking West Midlands PMI report highlights further strong growth in the region’s private sector economy at the start of Q4. Activity and new business both continued to rise at marked rates in October, while backlogs of work increased moderately, it said.
Elsewhere, BDO’s Optimism Index, which predicts business performance two quarters ahead, increased from 100.7 in September to 101.7 in October, outperforming the 100.0 mark that indicates the economy’s long-run average growth rate and echoing the CEBR’s prediction that the economy will now expand by 2.7% in 2014.
It concluded the economic recovery would remain strong in Q4 2013 and could gather pace going into Q1 2014.
Both studies also confirm the findings of the latest CBI research showing record confidence levels among manufacturing SMEs.
The PMI study said higher workloads had encouraged firms to step up recruitment, and as a result employment during October rose at its strongest rate since the start of the survey in 1997. Meanwhile, input and output prices both increased at sharper rates.
Business activity at private sector companies in the West Midlands increased for a sixth successive month in October. The rate of growth remained marked, although was below the UK average.
The Lloyds Bank Commercial Banking West Midlands Business Activity Index – which measures the combined output of the region’s manufacturing and service sectors – posted 58.3; little-moved from September’s reading of 58.2. Activity rose at strong rates in both the manufacturing and service sectors.
Underpinning strong activity growth was a further marked increase in the level of new business received by private sector firms in the West Midlands.
Dave Atkinson, area director SME Banking in the West Midlands, Lloyds Bank Commercial Banking, said: “The record rate of job creation seen in October is excellent news for the West Midlands, and underlines the rising confidence among firms in the region. Survey respondents highlighted improved demand from abroad, which is a boom for West Midland’s exporters.”
BDO said expectations that growth may pick-up speed were being driven by an economy-wide recovery, with optimism in the services sector, which accounts for over three-quarters of the UK economy, rising to 99.9 in October from 99.2 in September and optimism among manufacturers rising to 109.6 from 107.0.
In further encouraging news, it said there was evidence that the rise in BDO’s Output Index, which predicts short-run turnover expectations, had been driven by an increase in new export orders from the Eurozone.
Mark Anslow, partner and head of BDO LLP in Birmingham, said: “With broad-based recovery now a reality, the Chancellor has room for manoeuvre as he looks towards the Autumn Statement.
“Recent measures have prompted recovery on the demand side of the economy, but the Chancellor risks bottlenecking growth unless he turns his attention to unlocking the supply side. As public sector finances improve, there is flexibility to increase investment in areas such as house building, along with the additional benefit of giving the construction industry a much-needed boost.”
