Business activity rate rise sharpest on record - NatWest

Firms in the West Midlands recorded the sharpest rise in business activity on record, according to new PMI figures released by NatWest today.

NatWest West Midlands PMI Business Activity Index for April was recorded at 65.9, up from 60.7 in March, indicating the sharpest increase in business activity since data collection started in January 1997.

The index is seasonally adjusted and measures the month-on-month change in the combined output of the region 's manufacturing and service sectors.

Survey participants mentioned that the ongoing relaxation of Covid-19 restrictions boosted demand for goods and services, which in turn underpinned output growth. The rate of expansion was the fastest of the 12 monitored UK regions.

West Midlands private sector firms noted a second consecutive monthly rise in new work intakes at the start of the second quarter.

April data highlighted back-to-back increases in private sector jobs across the West Midlands. The pace of employment growth was marked and the fastest since September 2017. Companies that took on extra staff commented on greater output requirements due to a pick-up in demand.

Not only did West Midlands companies register a second consecutive monthly increase in unfinished business during April, but the rate of accumulation accelerated to the strongest since the series started in November 1999.

Around a third of survey participants signalled higher backlogs, citing capacity constraints due to a rebound in new orders. Only 11 per cent of firms noted a reduction.

Amid reports of supply-chain disruptions and rising prices for a wide range of inputs, average cost burdens facing West Midlands firms increased sharply in April.

Prices charged for goods and services in the West Midlands continued to rise in April, stretching the current sequence of inflation to 11 months.

April data showed that private sector firms in the West Midlands remained confident that output would increase over the course of the coming year.

John Maude (pictured), of NatWest's Midlands and East Regional Board, commented: “The economic recovery of the West Midlands private sector continued in April, with companies noting record increases in new business and output that were the strongest of all 12 monitored UK regions.

"The resurgence in demand, coupled with an intensification of capacity pressures and upbeat growth projections, supported job creation in the West Midlands. Private sector employment expanded at the quickest pace in over three-and-a-half years as many companies sought to replace staff laid off at the height of the pandemic.

“The latest results showed another acute increase in input costs, which was again linked to global supply-chain constraints. The rate of inflation climbed to a ten-year high, causing a stronger rise in prices charged for goods and services. ”