Rising sales and demand offers hope for Midland business

BUSINESS activity is picking up in the West Midlands as firms continue to reopen following lockdown.

The latest NatWest PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the output of the region’s manufacturing and service sectors – registered 64.0 in June.

While this figure is slightly down from the 65.5 recorded in May, it is the third-quickest rate of expansion since the series started in January 1997. Firms across the region linked the growth to a pick-up in sales, strengthening demand conditions and businesses reopening.

The economy is set to open further when so-called ‘freedom day’ on Monday sees almost all Covid restrictions dropped.

The data also found a fourth successive monthly increase in new orders at private sector firms.

Sales rose in line with looser Covid-19 restrictions, better demand conditions and improved market confidence. June also saw a monthly rise in employment – the sharpest and strongest increase in 24 years.

The West Midlands registered the quickest upturn in jobs of all 12 monitored regions.

This was most prevalent in the manufacturing and service sectors and was associated with a pick-up in new business and associated capacity expansion efforts.

West Midlands firms remained optimistic that the output would rise in the year ahead amid expectations of a reduction in Covid-19 cases and the vaccination rollout.

The overall level of positive sentiment fell to a four-month low but remained elevated by historical standards.

John Maude, from NatWest’s Midlands and East regional board, said: “The economic recovery of the West Midlands extended to June, as the easing of covid-19 restrictions earlier in the year continued to boost demand for goods and services.

“Notably, business activity again expanded at a near-record pace.

“The strength of the rebound caused capacity pressures among local firms who responded to rising backlogs by hiring additional staff at an unprecedented monthly rate.

“The West Midlands was the top performer on a regional basis for employment growth.” He added: “PMI data revealed that local firms retained pricing power in July, with many businesses able to share additional cost burdens with their clients via increases in selling prices.

“Rates of inflation of both input costs and output charges were the third-highest in the respective series histories.”