The easing of Covid-19 restrictions and the reopening of businesses helped West Midlands firms reach new business records last month, a new report has found.
The latest NatWest PMI report revealed that private sector companies in the West Midlands saw a third consecutively monthly increase in new business in May in what is the sharpest upturn in new orders in the report’s history.
This puts the West Midlands in second place in the regional rankings for new business, behind the North West.
The report also found that West Midlands firms recorded the second-quickest increase in output since data became available in January 1997.
Companies across the region were at their most upbeat towards the year-ahead outlook since the series started in July 2012.
Firms are predicting a pick-up in consumption and plan to launch new products and services.
The retreat of Covid-19, vaccine success and hopes for further relaxations of travel restrictions were among the key factors boosting confidence.
Employment across the West Midlands also increased for the third straight month – and the rate of growth was the fastest in 24 years.
The West Midlands and Yorkshire and Humber shared the top spot for employment growth in May.
Private sector companies in the West Midlands noted a further increase in outstanding business volumes last month, taking the current sequence of accumulation to three months.
Moreover, the rate of expansion was the second-fastest in the series history, slower only than that seen in April.
The rise was linked to material shortages, robust demand conditions and insufficient staff.
Firms also noted a further increase in cost burdens halfway through the second quarter.
Companies associated the latest rise with supply shortages, difficulties in international shipping as well as higher transport and staff costs.
Manufacturing companies observed a faster upturn in expenses than their services counterparts. The overall rate of input cost inflation in the West Midlands outpaced the UK average.
Local firms continued with their efforts to shield margins from cost increases by lifting selling prices.
May data in fact pointed to the strongest rate of charge inflation in just under 13 years.
As was the case for input costs, the sharper increase was noted in the manufacturing industry. Output charge inflation also quickened at the UK level, but remained below that seen in the West Midlands.
John Maude, NatWest Midlands and East Regional Board, said: “West Midlands companies welcomed a notable increase in new work intakes during May, with demand improving considerably as more businesses reopened due to the latest relaxation of Covid-19 restrictions.
“The improvement in sales fed through to the local labour market, with employment expanding at the sharpest rate on record as firms sought to accommodate for rising new business, and prepare for upcoming increases, by expanding their operating capacities.
“Job creation in the West Midlands was the joint-best of all 12 monitored UK regions.
“However, the improvement in the health of the West Midlands economy was accompanied by an intensification of inflationary pressures. Input costs and selling charges both rose at the sharpest rates in close to 13 years as supply shortages and difficulties in international shipping pushed up firms’ cost burdens considerably.”