West Midlands sees business activity growth and lower cost pressures in May - PMI report

Business activity across the West Midlands last month (May) saw continued growth, albeit marginally slower than in April, coupled with receding inflation, the latest NatWest PMI data showed.

The headline Business Activity Index for the region, which measures the month-on-month change in the combined output of the region’s manufacturing and service sectors, showed 54.2 - showing growth for the eighth successive month.

READ MORE: West Midlands business confidence on the rise

It was slightly down from April's 25-month high of 55.5 but consistent with a marked pace of expansion above the long-run average, with businesses citing positive demand, better economic conditions, and new client wins as reasons for the growth.

Business confidence hit a three-year high and showed the highest level among the12 monitored UK regions and nations. And for the 16th successive month, new orders placed with private companies in the West Midlands rose.

"West Midlands firms' ability to price more competitively, owing to receding cost pressures, spurred demand for local goods and services," said Dipesh Mistry, chair of the NatWest Midlands and east of England regional board.

"The solid increase in new orders seen in May underpinned a marked upturn in output and boosted business confidence.

"Companies in the region were more upbeat than anywhere else in the UK," he said.

But he highlighted the inability of firms to find skilled job applicants for existing vacancies - a key factor that led to a fall in overall employment.

"However, the rate of job shedding at least softened to the weakest in three months," he added.

Companies input prices rose again in May, but the rate of inflation eased considerably since April, the report showed.

Some firms noted higher food, fuel, material and wage costs. Others reported lower prices for electricity, energy, stainless steel and hydrocarbons.

Regionally, the West Midlands placed bottom in the rankings for cost inflation in the latest month.