A positive uptick in East Midlands manufacturing could be slowing according to a new NatWest business survey. Its latest survey of bosses and company owners in the region suggests there was only a “marginal” increase in new business activity last month, while inflation continued to bite.
The bank’s most recent PMI Business Activity Index – which also covers the service sector – did however suggest that more people were in work, while hopes of a pick-up in sales, and planned investment in new products and machinery, were said to be driving positive sentiment. The degree of confidence did slip to a three-month low, however, broadly in line with the UK average.
Bosses said it was proving easier to find candidates for jobs and many said they were taking on staff.
That said, the pace of job creation slowed from that seen in April, reflecting the wider UK trend which also indicated only a marginal rise in staffing numbers.
Orders, they said, were down for an eighth successive month, with lower backlogs of work were due to sufficient capacity and muted growth of new orders. The rate of contraction slowed to the weakest since November 2022.
The pace of decline in the East Midlands was quicker than the UK average, despite softening.
Cost burdens faced by East Midlands private sector firms continued to increase during May, with inflation up fractionally, but at its lowest rate of growth since February 2021.
Higher wage bills and higher prices for some raw materials including timber and concrete added to inflationary pressures.
Rashel Chowdhury, who sits on the NatWest Midlands and East Regional Board, said: “Firms in the East Midlands continued to register expansions in output and new business in May, however, rates of growth remained muted and only marginal overall amid challenges posed by the cost-of-living crisis and ongoing inflationary concerns.
“Nonetheless, some resolution to issues faced earlier in the year with regards to firms' ability to hire meant that employment grew again, as capacity shortages in certain areas were plugged.
"Inflation remained a key concern for firms and their expectations regarding future output levels and demand conditions.
“Cost pressures were sticky in May, as the latest data signalled a reversal of the recent downward trend in input price inflation. Efforts to drive sales in the face of strain on margins, however, led to a softer uptick in charges."
