Business conditions improved in the region’s private sector economy during July, according to the West Midlands Purchasing Managers Index (PMI).
The West Midlands PMI, sponsored by Advantage West Midlands (AWM), features original survey data collected from a representative panel of companies based in the West Midlands and operating in both manufacturing and service sectors.
Panel members reported further robust increases in both output and new orders, with the respective rates of growth quickening since June.
Although outstanding business fell modestly, companies expanded their workforces through the recruitment of new staff.
Output price inflation accelerated in July despite a slower rise in input costs during the month.
July’s strong and accelerated rise in business activity extended the current period of growth to 13 months and was sharper than the UK average. Manufacturing remained the principal driver of expansion, although service providers also noted growth.
Higher activity levels were supported by another rise in new business placed with West Midlands companies in July. Panellists commented on improving demand conditions and increased activity at clients as factors underpinning new order growth.
Although easing since the previous month, growth of employment in the West Midlands remained sharper than the UK average during July. Staffing levels have now increased throughout the past six months. However, divergent trends were apparent at the sector level, as manufacturers added to payrolls at a solid pace whilst service providers continued to cut jobs.
Overall employment rose despite a fifth consecutive reduction of outstanding business during July. Lower backlogs were centred on the service sector, and were mainly attributed to spare operating capacity.
Input price inflation in the West Midlands slowed to the weakest in four months during July. However, the rate of increase remained above the UK average. Manufacturers continued to report a much steeper rate of cost inflation than service providers.
Prices charged by private sector firms in the West Midlands rose at a marked rate in July. The latest increase in output prices was the eighth in successive months and the sharpest since September 2008.
Glynn Jones, head of economics and strategy at AWM, said: “The PMI figures for July show the West Midlands economy performing strongly with manufacturing continuing to lead the way.
“Improving business conditions are reflected in the accelerated rises in business activity and new orders, with employment increasing - all at rates which exceed the UK average.
“Whilst backlogs have continued to fall the change has been modest, with the rate of input price inflation also easing on last month. Some weaknesses in the position of services however remain, with the sector recording lower backlogs and a decline in payroll numbers.”