Businesses in the West Midlands saw a marginal upturn in activity in February, a new report has revealed.
The latest NatWest West Midlands PMI data, which measures the month-on-month change in the combined output of the region's manufacturing and service sectors – showed that businesses in the region returned to expansion territory last month, rising from 41.5 to 51.1.
It comes after West Midlands firms signalled a sharp contraction at the start of the year.
Firms reporting growth attributed it to the clearing of backlogs, projects in the pipeline and reduced uncertainty.
Meanwhile, the amount of new work companies took on in February fell marginally - firms blamed this on the national lockdown restricting sales.
That said, 66 per cent of West Midlands companies expect to grow over the next 12 months, with confidence pinned on hopes that the Covid-19 vaccination programme will curb the spread of infections, leading to the lifting of restrictions and a recovery in demand.
The data also shows that employment in the West Midlands decreased in February, stretching the current sequence of contraction to 13 months.
The fall in headcounts in the region was more pronounced than at the UK level.
Anecdotal evidence suggested that job shedding stemmed from retirements and redundancies, but the overall pace of reduction eased to the weakest in a year as some firms took on extra workers to fulfil demand needs and clear backlogs of work.
Elsewhere, private sector firms in the West Midlands signalled a second successive monthly drop in unfinished work halfway through the opening quarter of 2021.
The rate of depletion was moderate, despite quickening from January, and much softer than the UK average.
Amid reports of material shortages as well as higher prices for freight, metals, packaging and plastics, average input costs at West Midlands companies increased in February.
The rate of inflation was sharp and the second-fastest in over two-and- a-half years - behind December 2020.
February data highlighted a ninth successive monthly rise in prices charged for goods and services across the West Midlands. Survey members that hiked their fees indicated that additional cost burdens had been shared with clients.
John Maude, NatWest Midlands and East Regional Board, said: "Despite the ongoing national lockdown, West Midlands companies managed to lift business activity in February as some diverted resources towards the completion of backlogs of work.
"This is welcome news, particularly after January's marked fall in output and given that contractions had been sustained across many other UK regions.
"The COVID-19 vaccination programme has lifted spirits, with West Midlands firms strongly optimistic towards growth prospects. The upbeat sentiment failed to translate into job creation, but employment declined only slightly in February.
"With new orders nearing stabilisation and a roadmap for the lifting of lockdown restrictions now laid out, a recovery in economic conditions is anticipated in the year ahead."
