All nine English regions recorded a rise in private sector business activity last month with the West Midlands leading the recovery according to a new report.

The region was helped by a resurgent manufacturing sector, replacing Yorkshire and Humber at the top of the table, Lloyds TSB said, while London and the South East continued to grow after slipping at the end of 2011.

The growth in output was coupled with a pick up in new business in January, especially in the West Midlands and London, following a near-stagnation seen in the last quarter of last year.

The survey comes amid mixed signals for the economy as many forecasts suggest the UK will fall into recession this year, while more recent surveys for January such as industry data for manufacturing and services have been better than expected.

The nine regions which recorded growth are Yorkshire & Humber, East, West Midlands, North West, East Midlands, London, South East, South West and North East.

Andy Youngman, area director for Lloyds TSB Commercial in Birmingham, said: “While the latest survey showed that firms are moving in the right direction, uncertainty across the Eurozone, which is a key trading area for many UK firms, may be dampening some of the recent optimism seen in the domestic economy. Wider export markets beyond Europe are however, continuing to prove more resilient, and may offer expansion opportunities for companies that are able to successfully access them.

“SME growth and exports are both likely to be key factors in leading the UK economic recovery, and the increased output and employment shown in the latest PMI survey offer an encouraging sign that UK firms are remaining strong in the face of Eurozone fears.

“Whether firms in Birmingham are able to build upon December’s growth in 2012 will depend partly on whether sufficient progress can be made to resolve the euro crisis and whether businesses are able to act to seize opportunities for investment and growth.”

Weaker input price pressures provided some support to businesses in the latest survey period, Lloyds said, largely reflecting lower energy bills and the knock on effects of reduced raw material costs on world markets.

The survey also indicated that private sector firms’ output charges were broadly unchanged in January, suggesting squeezed pricing power amid strong competition for new work.

However, job creation remained muted in the period as margins came under pressure and outstanding workloads continued to fall.

The main exceptions were the West Midlands and Yorkshire & Humber, where employment growth remains robust.

At the other end of the scale, London was the only region to see a drop in private sector staffing levels at the start of the year.

Overall, rates of private sector job creation were relatively modest across the English regions in January, and only London saw an outright fall in employment numbers.

Lloyds said anecdotal evidence suggested that jobs growth was driven by stronger workloads in January, but spare capacity and uncertainty about the wider economic outlook continued to act as a drag on staff hiring.

Average prices charged by private sector firms in the English regions were broadly unchanged in January, with survey respondents mostly suggesting that subdued demand had created strong competition for new work and in turn squeezed pricing power.