The East Midlands saw a big upturn in business activity last month as companies emerged from lockdown, a new report has found.
According to the latest NatWest East Midlands Business Activity Index, new business across the region’s private sector rose notably in July.
The report said that the rate of growth quickened to the fastest since April, 2018, attributing the rise to the number of businesses and clients reopening following lockdown, along with a pick-up in customer demand.
According to NatWest, the rise was quicker than the UK average and one of the quickest among the 12 UK regions the index studies, suggesting that the East Midlands is bouncing back from the historic low recorded in its report for April.
The monthly study also said that business confidence among private sector firms operating in the East Midlands improved again in July, with the degree of optimism reaching its highest levels since February.
Those who contributed to the report attributed increased positive sentiment to hopes of a further uptick in client demand and a continuation of the easing of lockdown restrictions.
However, the East Midlands performance in July was tempered by a quicker fall in staffing numbers, despite the pick-up in client demand. But NatWest said that the fall was not as severe as April’s nadir.
Firms noted that job losses stemmed from redundancies and the non-replacement of voluntary leavers. Many stated that lower workforce numbers were linked to efforts to reduce costs.
The rate of reduction was slower than the UK average, however, which indicated a marked contraction in employment.
The report also found that average cost burdens across the East Midlands private sector rose for the second successive month in July, with the rate of increase quickening to a five-month high.
Greater input prices were commonly attributed to higher costs for raw materials, especially related to PPE. Rising plastics and logistics prices were also highlighted.
John Maude, from NatWest’s Midlands and East Regional Board, said: “East Midlands firms registered a marked pick up in business activity growth as lockdown restrictions largely eased further and the expansion in new orders accelerated.
“Although firms were more confident of a rise in output over the coming year, weak demand conditions due to stay-at-home measures led to another round of job cuts.
"Meanwhile, higher costs for raw materials and PPE led to an uptick in the rate of input price inflation.
“Despite firms recording the first increase in charges for four months, the pace of increase was only marginal overall as some continued to offer discounts.
“We will need to see what impact the experience of local lockdown in Leicester may create of the region going forward.”
