The East midlands economy appears to be strengthening, with orders on the increase, according to a new survey of business managers.
The monthly PMI Business Activity Index from NatWest bank suggests inflation is also softening –though the number of new jobs being created has slowed.
It suggests the rise in outputs was at the fastest rate seen in the region for almost a year. However, NatWest said, the upward shift was lagging behind the UK average.
The survey found the level of optimism was at its highest in over a year and was slightly greater than the UK average – linked to hopes of increased client demand, investment in new product development and diversification.
Likewise there was a continuing fall in the costs of raw materials and energy, though the price of finished goods was still rising, albeit at a slower rate that previous months.
The fall in workforce numbers followed back-to-back expansions seen in the opening two months of 2023. Although only fractional, the decline in staffing numbers was attributed to the non-replacement of voluntary leavers amid cost-cutting initiatives.
The slight contraction in employment contrasted with a stabilisation in headcounts seen across the UK as a whole.
Rashel Chowdhury, from the NatWest Midlands and East Regional Board, said: “Companies in the East Midlands registered another monthly expansion in activity in March, thereby ending the first quarter on a more positive note.
“New business rose at a quicker pace, as client demand reportedly strengthened. Nonetheless, historically subdued demand conditions and further marked hikes in operating expenses led firms to cut their workforce numbers.
“Cost-cutting initiatives were put in place as many noted sufficient capacity to work through incoming business.
“On a more positive note, inflationary pressures softened again. Rates of input cost and output charge inflation eased to the slowest for over two years, as some material prices moderated.
"Despite muted demand conditions and still challenging rates of inflation, firms' confidence in the outlook for output reached the strongest for over a year. East Midlands firms were broadly in agreement with their counterparts across the UK as a whole, who also recorded more upbeat expectations.”
