West Midlands economy contracting at faster rate than any other region

Up and down arrows on wood chippingsThe latest Purchasing Managers Index (PMI) report for the West Midlands reaffirms the declining economic outlook. Business activity and new orders fell at faster rates in February, with manufacturing particularly weak as the impact on the automotive sector is more acutely felt.

The PMI is one of the leading indicators monitored as part of the regional monthly economic outlook report prepared for the West Midlands Taskforce.

Key headlines from the latest PMI report are:

  • Business activity declined for the 9th successive month. The West Midlands region was the worst performing UK region in February 2009. The downturn was driven primarily by manufacturing, partly reflecting the ongoing uncertainties in automotives.
  • New orders declined further in February, with over 50% of those surveyed reporting a fall in new orders, reflecting tough credit conditions and the ongoing global economic slowdown.
  • Firms continue to reduce outstanding orders with services signalling the sharper rate of contraction.
  • While employment prospects exhibited a marginal improvement on January, the Index is still entrenched in the negative zone, recording the second lowest level in the series’ twelve year history.
  • Input prices increased slightly in February which was against the broad national trend. Services reported the higher input costs, with average staff costs higher, while lower commodity prices in manufacturing feeding through into lower manufacturing input costs overall.
  • Average output prices fell at a record pace during February, reflecting weak demand and lower pricing in an effort to secure new business. The region saw output prices decline faster than the UK average, with services reporting a substantial decline in average charges while manufacturers signalled a slight increase.

(Image by chebbs)

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