West Midlands business activity declines in September but remains above UK average

THE pace of business activity among private sector firms in the West Midlands slowed last month with levels now at their lowest for more than two years.

The latest Lloyds Bank Commercial Banking West Midlands PMI report shows new business continued to increase at a marked pace, while employment growth remained solid. Backlogs of work were depleted further, with the rate of contraction accelerating to the sharpest since February 2013. Input and output prices both fell slightly on the month.  

The Lloyds Bank West Midlands Business Activity Index – which measures the combined output of the region’s manufacturing and service sectors – slipped to 54.0 in September. While down from 55.1 in August to its lowest level since May 2013, the figure still indicates growth – in fact stronger than the UK average.

New business placed with West Midlands private sector companies continued to rise at a marked pace last month, with growth unchanged since August and faster than that recorded across the UK as a whole.

Employment in the region’s private sector increased further during September, extending the current period of expansion to 33 months. The rate of job creation eased slightly since August, although it remained solid overall.

Higher workforce numbers helped firms make inroads into their backlogs of work. Outstanding business in the West Midlands private sector fell for a fifth successive month in September. The rate of decline was marked, having accelerated to the sharpest since February 2013.  

Input prices in the private sector decreased for the second month running in September. The rate of decline in costs quickened since August, although remained moderate overall.

Meanwhile, prices charged by West Midlands private sector firms also fell in the latest survey period. The drop in charges was the first in three months, albeit marginal overall. Authors of the latest report said anecdotal evidence suggested that competitive pressures had weighed on firms’ pricing power.   
        
Commenting on the PMI survey, Mark Cadwallader, area director for SME Banking in the Midlands, Lloyds Bank Commercial Banking, said: “West Midlands firms saw output growth ease further in September, but new business inflows held up at a marked pace to suggest that underlying demand conditions remain robust. Another solid expansion of staffing levels was recorded, boosting capacity and contributing to backlogs of work being depleted more quickly.”