The headline NatWest East Midlands PMI® Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – posted 51.5 in April, up slightly from 51.2 in March.
The latest data signalled a marginal rise in output at East Midlands private sector firms. Nonetheless, the rate of expansion in activity was the fastest since May 2022. Greater output reportedly stemmed from increased new order inflows and further upticks in client demand. That said, the pace of growth was slower than the UK average, with only Wales registering a weaker rise in activity.
East Midlands private sector firms signalled a third successive monthly upturn in new business during April. Companies linked the expansion to greater demand from existing clients and the acquisition of new customers. That said, the rate of growth slowed to only a marginal pace. In fact, of the 12 monitored regions, only Northern Ireland registered a slower increase in new orders.
April data signalled a strengthening in business confidence across the East Midlands private sector. Output expectations improved to the highest since February 2022, with the region’s companies more upbeat about the outlook for output over the coming 12 months than the UK as a whole. Hopes for greater client demand, investment in marketing and new product development spurred optimism.
Stronger business confidence was broad based, with manufacturers more upbeat than service providers.
Private sector firms across the East Midlands registered a renewed rise in employment during April. The upturn was the third in the last four months, with the rate of job creation moderate overall. Higher workforce numbers were often attributed to greater business requirements following increased new orders.
Of the 11 monitored UK regions that signalled growth in employment, only the North East recorded a slower uptick than the East Midlands.
The level of outstanding business at East Midlands firms continued to contract in April, thereby extending the current sequence of decline to seven months. The rate of decrease was strong overall and the fastest in 2023 so far. Companies noted that sufficient capacity to process incoming new business allowed them to work through their backlogs successfully. The decline in work-in-hand was in contrast to the UK trend which signalled unchanged levels of incomplete business.
East Midlands firms registered a marked rise in input costs at the start of the second quarter. Input prices increased following reports of greater raw material, supplier and wage bills. Nonetheless, the rate of cost inflation slowed again to the weakest since February 2021. The pace of increase was also slightly softer than the UK average.
Manufacturers and service providers recorded slower upticks in cost burdens, although the latter saw much sharper increases in business expenses.
April data indicated a renewed uptick in the rate of output charge inflation at East Midlands firms. The rise in selling prices was marked overall and sharper than the series average. Hikes in output charges were commonly linked to the pass through of higher costs to clients.
The pace of charge inflation was the second-slowest in two years, despite being broadly in line with the UK average.
Rashel Chowdhury, NatWest Midlands and East Regional Board, said: “East Midlands firms signalled a sustained upturn in output during April, as a further rise in new orders supported total activity.
“Increased demand spurred firms on to expand workforce numbers, and the rate of job creation was the fastest since last October. In turn, companies were more upbeat in their expectations for the coming year as business confidence reached the highest in over a year.
“Inflationary pressures remained marked, however. Although firms noted a softer rise in cost burdens again, there was a renewed acceleration in charge inflation which is likely to add strain to already challenged customer purchasing power.”
