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Birmingham Post
Birmingham Post
Business
Hannah Baker

South West companies struggle to recruit as activity increases

Businesses activity in the West of England continued to increase in April, but companies in the region struggled to find staff to fill jobs, according to a new report.

The South West's private sector expanded "strongly" last month, the latest NatWest PMI found, though at a slower rate than in March.

Inflationary pressures also remained, with a further steep increase in input prices feeding through to a record rise in prices charged by South West firms.

The headline NatWest South West 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 – registered 60.3 in April, down from 64.3 in March.

New business placed with South West private sector companies rose for the 14th month running in April - well above the series average of 53.2, but the softest upturn seen for three months. Companies indicated that a further improvement in market conditions since the easing of Covid restrictions and new product releases had supported the growth.

The rate of employment growth across the South West eased for the first time in three months in April, according to NatWest, but the pace of job creation was slightly above the UK-wide trend. According to anecdotal evidence, workforce numbers rose due to increased business requirements and greater client demand. However, candidate shortages reportedly weighed on the overall pace of expansion, as some firms struggled to fill vacancies or replace departed staff.

The level of unfinished business at South West private sector firms rose for the 13th month in a row. The rate of accumulation picked up from March and, though modest, was the second-quickest seen of all 12 UK regions (after Northern Ireland). Higher amounts of work-in-hand (but not yet completed) were frequently linked to shortages of materials and labour alongside rising intakes of new work.

Companies also reported a rise in operating expenses last month, which was attributed to rising prices including for energy and raw materials, with the Russia-Ukraine war also mentioned as a key driver of inflation. As a result, many private sector firms raised their selling prices in April.

Paul Edwards, chair of the NatWest South West Regional Board, commented: "The latest NatWest PMI data highlighted a slight softening of growth momentum across the South West private sector, with increased global economic uncertainty, material shortages and rising costs all weighing on the latest expansions of output and new work.

"Nonetheless, the region noted the joint-quickest rise in sales of all 12 UK regions, with more marked slowdowns in demand seen elsewhere. Encouragingly, business confidence improved slightly from March's near-two year low, and companies continued to expand their staffing levels. However, increased global uncertainty, notably the Russia-Ukraine war and lockdowns in China, combined with sharply rising costs and shortages, means a further slowing of growth momentum is likely."

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