Concerns dampen eight-year high for growth
EAST Midlands bosses said business growth hit an eightyear high last month, but said war in the Ukraine and rampant inflation saw confidence slip to a 14-month low.
The headline Natwest East Midlands Business Activity Index signalled a marked month-on-month upturn in business activity across the region.
The rise in output was the sharpest since July 2014 and only slightly behind the UK average.
Alongside reports of stronger client demand, firms noted that the increase in activity stemmed from the further easing of Covid-19 restrictions.
Natwest said the upturn in new orders eased from February’s recent high and was slower than the UK average, but the rate of growth was stronger than recent trends.
As well as putting it down to the easing of restrictions, many companies put greater client demand down to rising prices and threats of further supply delays following Russia’s invasion of Ukraine.
The March data indicated a lower degree of optimism among East Midlands private sector firms about the outlook for output over the coming year.
The level of positive sentiment was the lowest since January 2021 and below the UK average.
Confidence reportedly stemmed from hopes of greater client demand and a reduction in the impact of any future Covid-19 variants. That said, inflation concerns still weighed on expectations.
Job creation was also up, according to the survey, linked to a greater ability to find suitable candidates and as a response to increased new business.
The rate of job creation was slower than the UK average, but quicker than the region’s series trend.
There was also a growing backlog at regional businesses, put down to higher orders and delays in deliveries.
The costs of raw materials and selling prices also kept going up, businesses said.
John Maude, who sits on the Natwest Midlands and East Regional Board, said: “Private sector firms across the East Midlands registered a stronger end to the first quarter, as the region continued to recover from December’s Omicroninduced slowdown.
“Output rose at the sharpest rate since July 2014, despite a slight softening in new order growth. The end of Covid-19 restrictions helped boost footfall and client interest.
“Inflationary pressures intensified once again in March, as the rate of increase in costs accelerated to a four-month high.
“Many noted that Russia’s invasion of Ukraine exacerbated pressure on supply chains. In response, East Midlands firms hiked their selling prices at the fastest pace on record.
“Meanwhile, concerns regarding future increases in prices weighed on business confidence, as the degree of optimism slipped to the lowest since January 2021.”