Private sector output stagnated in the West Midlands in March ending a three-month period of expansion, according to the latest purchasing managers’ index report.

Higher activity at service providers was offset by a decline in manufacturing output, the Lloyds TSB West Midlands PMI report said.

The Lloyds TSB West Midlands Business Activity Index posted a reading of 50.0, down marginally from 50.7 in February.

Activity was flat despite the fastest rise in new business for almost a year and a further, albeit slower, fall in backlogs of work.

Companies signalled another modest rise in staffing levels, while rates of input and output price inflation picked up.

The region performed worse than the UK average, where a moderate increase was signalled.

Andy Youngman, area director for Lloyds TSB Commercial Banking in Birmingham, said: “While business activity came to a standstill in March, a rise in new work offered reassurance that the underlying situation remains positive for the region’s private sector economy.

“This was backed up by continued job creation across the region, indicating that companies remain confident in their outlook.

“However, cost pressures increased as the weaker pound led to higher input costs, in turn leading companies to raise the prices charged to consumers.”

Output failed to rise despite a solid increase in the level of new business received by West Midlands companies during March.

Panellists commented that an improved demand environment and increased client willingness to spend had boosted inflows of new work.

Outstanding business was down for an eleventh consecutive month, although the pace of decline eased to the weakest since last September.