NatWest has released its latest Monthly Purchasing Index for the Midlands which provides an overview of business activity in our region in September. Changes in the Midlands reflected wider shifts in UK Business Activity as firms are increasingly impacted by inflation and the cost-of-living crisis.
The research revealed that the West Midlands Business Activity Index decreased from 49.3 in August 2022 to 47.8 in September 2022, the second month in a row to register a decline. Output has fallen at its quickest pace since January 2021. This correlates with the wider picture in the country, with the UK Business Activity Index decreasing from 49.6 in August 2022 to 49.1.
On the other hand, the East Midlands Business Activity Index increased from 45.0 in August 2022 to 46.8 in September 2022, although it still remains below the 50-growth mark as this was the second-fastest contraction since the start of 2021. Firms indicated that the decrease in business activity was linked to the impact of inflation and hikes in energy costs on customer spending.
Of the 12 UK regions, the West Midlands region was the sixth highest and the East Midlands was the third lowest for the Business Activity Index in September 2022.
Looking ahead, the West Midlands Future Business Activity Index decreased from 67.8 in August 2022 to 64.4 in September 2022, meaning the degree of optimism towards business growth is at its lowest level since May 2020. The decline in optimism can potentially be linked to recession worries, acute inflationary pressures, competitive conditions, subdued demand and spending fears among households.
The East Midlands Future Activity Index increased from 59.6 in August 2022 to 61.9 in September 2022, the degree of optimism for the year ahead is at the strongest level since May 2022. Firms were optimistic due to planned investment in new product lines and marketing. However, firms also reported confidence was stemmed due to ongoing concerns regarding inflation and pressure on customer disposable incomes.
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