Economic trends in the West Midlands remain positive, with output and new order growth both higher, according to the latest PMI Business Survey Data, produced for the Royal Bank of Scotland by NTC Economics.
It said the acceleration in activity was encouraging, though a sharp rise in input costs and the weakness of employment in the manufacturing sector were still a concern.
RBS economist Julien Seetharamdoo said: "A favourable economic environment was reported to have underpinned strong demand, and it is hoped that this situation is maintained and leads to an erosion of the excess capacity that currently exists in the region. Without this, we are likely to see little improvement in the region's labour market - particularly in manufacturing. Moreover, rising cost burdens remain a key concern for the region's outlook."
David Hersey, regional director of corporate banking in the West Midlands, added: "These are encouraging figures from the region' private sector. The rise in input costs though is a continuing concern which will require careful management."
The Business Activity Index for the West Midlands recorded 58.0 to suggest the strongest rate of activity expansion since March 2004, although growth was below the national average.
n When it comes to doing business Britons choose Germans as their ideal business partners, it was claimed yesterday.
Research published by Portman Travel found that nearly one in three Britons admit that Germans would be their ideal choice for a successful business partnership, significantly outstripping the Dutch in second place (16 per cent), Swedes in third (seven per cent) and the French in fourth place (five per cent).