Resilient demand for West Midlands goods and services underpinned sustained growth of new business and output midway through the fourth quarter, according to the latest NatWest PMI data.
Firms also became more optimistic about the year-ahead outlook for business activity, a factor that spurred recruitment efforts. Price pressures intensified, but remained among the weakest in around three years.
The monthly report, a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors, was little-changed from October's reading of 50.7, registering 50.6 in November to signal a marginal increase in output.
Rising intakes of new work and better demand trends encouraged growth, anecdotal evidence showed. Private sector companies in the West Midlands continued to report higher intakes of new work during November, thereby stretching the current sequence of expansion to ten months.
Demand resilience, restocking efforts among clients and growing market shares reportedly underpinned the uptick. That said, the rate of increase in overall sales was marginal and softer than that recorded in October.
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Local firms registered the second-best trend for new orders regionally, behind London. Business confidence in the West Midlands remained positive in November, with the overall level of sentiment improving since October to move further above its long-run average.
Local firms generally foresee better demand and economic conditions in the year ahead, though investment and marketing initiatives also boosted optimism. West Midlands companies were the most upbeat regionally.
November data highlighted back-to-back increases in private sector employment across the West Midlands. Moreover, quickening to the strongest since April, the rate of job creation outpaced the series trend.
Survey participants indicated that existing vacancies had been filled, with acquisitions and resourcing for the year ahead also supporting recruitment.
Of the 12 monitored parts of the UK, only Scotland recorded a better trend for jobs than that seen locally.
With new business gains losing growth momentum, private sector companies in the West Midlands diverted resources towards the completion of pending workloads.
Unfinished business decreased markedly in November and to a greater extent than in October. Moreover, the latest fall stretched the current sequence of depletion to one year.
The rate of reduction in backlogs across the West Midlands was softer than the UK average. Companies in the West Midlands experienced a further increase in overall expenses midway through the fourth quarter.
According to them, food, fuel, material and wage costs were up since October. Despite quickening, the overall rate of inflation was among the weakest seen in three years and softer than the log-run series average.
Out of the 12 monitored UK regions and nations, the West Midlands registered the slowest rate of cost inflation. Ongoing cost increases triggered another upturn in prices charged for goods and services in the West Midlands.
The overall rate of inflation was marked and above its long-run average but remained one of the weakest seen in nearly three years. As has been the case in the previous seven months, local prices rose at a slower rate than that seen at the UK level.
Rashel Chowdhury, a member of NatWest’s Midlands and east regional board, said: "It's encouraging to see the West Midlands near the top of the regional growth rankings for both new business intakes and output during November.
"Even more so is the fact that local employment continued to rise at a healthy rate as firms prepared for anticipated improvements in demand in the coming months.
"Although companies were faced with another uptick in expenses, the rate of inflation was the weakest seen out of the 12 monitored UK regions and nations.
"This means that any cost-cutting efforts here don't need to be as severe as elsewhere and that local firms can perhaps invest to ensure their businesses' readiness for the expected rebound in sales."
