The West Midlands economy is doing better than many expect, according to new research.
And the regional analysis of July's Purchasing Managers Index by the Royal Bank of Scotland and NTC Research predicts more jobs will be created.
RBS economist David Fenton said: "The West Midlands economy has made a strong start to the second half of the year, notching up one of the fastest growth rates in the country.
"The service sector continued to grow apace, while the recovery in manufacturing output was a promising development. Against this favourable backdrop, the regional job market is likely to pick up in the months ahead, particularly if margin pressure continues to abate."
At 55.2 in July, the seasonally adjusted Business Activity Index signalled that growth in activity reached a four-month high, as companies benefited from improved market demand.
Sector data suggested that the latest upturn was principally driven by the strong performance of the service sector. After falling in June, manufacturing production also increased, but at a rate well below that of services.
New order growth strengthened in July, pointing to a solid increase in the level of new business received by the region's firms. Higher volumes of new business were the result of increased sales activity, including promotional and marketing campaigns.
The overall size of the West Midlands workforce declined for the third time in the past four months in July, largely as a result of ongoing restructuring programmes in the region's manufacturing sector. Nevertheless, the rate of decline in overall employment was only slight.
Meanwhile output and new business growth ground to a halt during the second quarter of 2005 for SME businesses in the Midlands, according to a separate report.
Produced by accountants PKF, the index, a quarterly survey of 800 SMEs operating in the manufacturing, construction and service sectors, saw output go into reverse with a Midlands score of 49.2.
This was the lowest in the UK and the first time since the beginning of 2003 that output had contracted - marks above 50 indicate expansion and marks below 50 indicate contraction on the previous quarter.
The flatlining of new business orders at 50.0 was a big drop from the first quarter score of 56.5 and below the national average of 52.7.
Firms cited poor retail sales, customer de-stocking and customer caution as some of the reasons.
Employment levels also fell slightly from 50.5 in the first quarter to 49.9 - the first time that employment has contracted in the Midlands since the end of 2003.