The economic slowdown among businesses in the East Midlands seems to be slowing according to new figures.
The latest monthly NatWest PMI survey of company managers suggests business confidence hit an eight-month high last month as inflationary pressures finally show signs of cooling.
The seasonally adjusted index –which measures the month-on-month change in business performance – showed that although there remained a solid decline in business activity, the contraction appeared to be easing.
The marginal improvement suggested that East Midlands firms had bucked a wider UK trend which showed a faster decline in activity.
The bank said that expectations regarding the outlook over the coming year across the East Midlands had also strengthened – to their highest since May 2022, but remained weaker than the UK average.
Some managers put greater positive sentiment down to planned investment and hopes of bringing in new customers as well as stronger client demand.
Workforce numbers at East Midlands businesses also expanded in January, following contractions in November and December.
That said, the rate of job creation was only fractional overall and well below the average for 2022.
Inflation also remained an issue among the region’s businesses, due to higher fuel, energy and wage bills, and the rising cost of materials.
Rashel Chowdhury, who sits on the NatWest Midlands and East Regional Board, said: “2023 started in a muted tone across the East Midlands private sector as firms continued to record solid contractions in output and new business.
“High inflation squeezed customer spending further, with the region registering one of the fastest downturns in new orders of the 12 monitored UK areas.
"Nevertheless, companies were buoyant in their expectations for future output, as business confidence strengthened. At the same time, firms registered renewed job creation, albeit only fractional overall.
"Although inflationary pressures remained historically elevated and continued to place downward strain on demand conditions, rates of increase in costs and selling prices cooled in January.
“The ability to pass-through any cost savings to customers will likely provide hope to businesses of a pick-up in customer spending as the year progresses."
