There was a notable improvement in operating conditions across the West Midlands economy during March, according to newly published research.
In parallel to receding price pressures, demand growth rebounded to a one-year high which in turn underpinned a solid expansion in output.
The last NatWest PMI report - a seasonally adjusted index that measures the month-on-month change in the combined output of the region's manufacturing and service sectors - was at 52.7 in March, little-changed from 53.0 in February and therefore signalling the second-fastest increase for 11 months.
Where growth was reported, survey members mentioned robust pipelines of new work, greater client spending, higher consumer footfall and better demand conditions in general.
New orders placed with private sector companies in the West Midlands rose for the second successive month in March. Moreover, the pace of expansion was marked and the strongest in a year.
Companies that reported higher sales mentioned improved demand conditions, fruitful advertising, the approval of pending quotes and higher consumer footfall.
Amid reports of higher raw material, utility, wage and transportation costs, West Midlands companies noted a further increase in their operating expenses during March.
Although sharp by historical standards, the overall rate of inflation softened to the weakest since January 2021. According to panellists, recent improvements in input supply helped dampen price pressures.
There was a stronger increase in input costs at the UK level than seen locally. March data highlighted a further, albeit softer, upturn in prices charged for goods and services across the West Midlands.
The latest rise was sharp but nevertheless the weakest since April 2021. Several companies reportedly hiked their selling prices due to ongoing increases in their expenses, while others passed some cost savings on to their clients.
The West Midlands shared the second spot in the rankings for charge inflation with Northern Ireland.
Despite remaining above the neutral level of 50.0, the seasonally adjusted employment index highlighted a slower and only marginal rise in West Midlands jobs.
The expansion was in fact the weakest in the current 25-month sequence of growth. Some companies mentioned greater investment in resources to support the delivery of set targets.
The upturn was stymied by recruitment challenges and redundancies at other firms. The local increase in jobs compared with stagnation at the national level.
Outstanding business volumes at private sector companies in the West Midlands were broadly unchanged in March, as signalled by the respective seasonally adjusted index registering only fractionally below the 50.0 threshold.
Some firms noted that new contract wins and insufficient labour capacity drove backlogs higher. Others linked a decline to efficiency gains and sufficient staff levels.
Regionally, only London and Northern Ireland recorded growth of backlogs. The future activity index was little-changed from February, thereby signalling a strong degree of optimism among West Midlands companies regarding the year-ahead outlook for output.
The overall level of confidence was above its long-run average and the second-highest seen in 14 months.
The onboarding of new clients, new product launches and the relocation of some firms away from London were among the reasons cited for upbeat forecasts. West Midlands firms were the most confident regionally.
Rashel Chowdhury, a member of NatWest's Midlands and East regional board, said: "The West Midlands economy ended the first quarter on a much better footing than it started, with a sustained increase in new business underpinning a further expansion in output.
"Improved footfall, greater client spending and successful marketing drove new business higher, besides a moderation in price pressures.
"Although companies noted another increase in their expenses, recent improvements in input supply and reduced volatility in energy prices curbed inflation.
"There was also a softer uptick in local prices charged for goods and services, albeit one that was among the strongest out of the 12 monitored UK regions."
