Rate of job shedding was sharp in West Midlands in October, report says
Subdued demand for West Midlands goods and services dented new business gains, ended a year-long sequence of output growth and sparked a steeper decline in employment in October, according to a report.
The NatWest Regional Growth Tracker data also showed receding price pressures locally.
The West Midlands Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered at the 50.0 no-change mark in October.
The headline figure was down from 51.2 in September and signalled the end of a 12-month sequence of expansion.
Uncertainty surrounding the October government budget, competitive conditions and demand weakness dented business activity, anecdotal evidence showed.
Private sector firms in the West Midlands recorded a twenty-first successive monthly increase in new sales at the start of the fourth quarter, but the rate of expansion was fractional and among the weakest over this period.
Panellists that signalled growth remarked on new client wins and prospects coming to fruition, but several companies saw order books dwindle amid demand weakness, subdued investment and market uncertainty.
As has been the case since February, companies reported lower workforce numbers in October. Moreover, the rate of job shedding was sharp and the steepest in close to four years.
Survey participants indicated that resignations, outsourcing, shortages of new business and expectations of greater employment costs after the Budget announcement all caused a fall in headcounts.
Lisa Phillips, Regional Managing Director, Midlands and East, Commercial Mid Markets: "While West Midlands firms managed to achieve marginal growth in new business, they remained cautious about scaling up operations and resorted to further job cuts in October.
"With data collection occurring prior to the Autumn Budget announcement, panellists consistently pointed to public policy uncertainty as a significant barrier to client demand and recruitment.
"Concerns over rising employment costs prompted many companies to downsize, resulting in the steepest workforce reduction in nearly four years.
"On a positive note, the decline in prices for energy and materials such as steel, helped alleviate cost pressures. Firms will be hopeful that the easing of material price inflation will help mitigate the impact of increased payroll tax expenses."
