Steep rise in business activity and job creation
BUSINESS expectations are strengthening as lockdown draws to an end and the impact of the mammoth vaccination programme takes hold, according to a new banking report.
The latest NatWest East Midlands Business Activity Index suggests a renewed emphasis on business activity, with the biggest rise in output since September, when restrictions were more relaxed.
The seasonally adjusted index showing the month-on-month change in manufacturing and services did however suggest the region upturn was slower than the UK average.
It said a renewed increase in client demand was the fastest since last August despite being slower than the rest of the country.
Anecdotal evidence suggested the rise in new sales was linked to plans to relax Covid-19 restrictions and the release of pent-up demand following an end to stay-at-home measures.
Business confidence among private sector firms in the East Midlands strengthened at the end of the first quarter and was the most marked since September 2015.
The degree of optimism was broadly in line with the UK trend.
Where firms registered expectations of an increase in output over the coming year, they attributed it to the planned roll-back of restrictions.
March data also indicated a second successive monthly expansion in workforce numbers across the East Midlands private sector.
Some businesses attributed the rise to greater new order inflows, with some also highlighting an increase in administrative requirements following Brexit.
The rate of job creation was the steepest since November 2018
despite the region seeing the slowest upturn of the 10 monitored areas which reported a rise in employment.
Panellists said a rise in work-inhand was due to a stronger increase in new order inflows.
Some firms in the manufacturing sector also stated that supply shortages and delays had constrained production capacity.
On top of all that, the March data signalled a fourth consecutive monthly increase in selling prices across the East Midlands private sector – the fastest rate of inflation acceleration for just under a decade, amid efforts to pass on higher costs to clients where possible.
The local increase was quicker than the UK trend.
John Maude, who sits on the NatWest Midlands & East regional board, said: “East Midlands firms signalled a much more positive end to the opening quarter of 2021, with a renewed rise in business activity and a strong increase in client demand.
“Following an extremely challenging winter for businesses, the planned easing of Covid-19 restrictions helped boost output expectations to their strongest since September 2015. Soaring costs remained a theme during March, as input prices rose at the sharpest pace for over four years amid supply chain disruptions and additional shipping fees. Encouragingly, firms were able to partially pass on higher costs to clients, with the rate of charge inflation accelerating to a near-decade high.”