Firms in the West Midlands experienced the slowest increase in business activity in over a year during September, although growth still remained above the UK average, according to the latest Lloyds Bank Regional Purchasing Managers’ Index (PMI) survey.

The West Midlands business activity PMI registered at 55.2 in September, down from 58.6 in August. A reading above 50.0 shows an expansion in output, while a reading below 50.0 indicates contraction.

Despite losing momentum, the pace of the region’s output growth was above the UK average (54.1).

Businesses also experienced a steep rise in new orders, as new customers boosted order intakes. Firms took on more staff at a faster rate than what was seen at national level, to satisfy the growing demand.

Business confidence remained high, with firms introducing new products and expecting increased sales over the next 12 months. However, the level of optimism was slightly lower than in August.

Meanwhile, unfavorable exchange rates contributed to higher input costs for firms. The increased cost burdens were partly passed on to clients through higher prices charged for goods and services

The Lloyds Bank PMI is the leading economic health-check of UK regions. It’s based on responses from manufacturers and services businesses about the amount of goods and services produced during September compared with the previous month.

Mark Cadwallader, regional director for SME banking in the West Midlands at Lloyds Bank Commercial Banking, said:

“West Midlands companies finished the third quarter with a solid expansion in business activity, however it was marked by its slowest growth in 13 months. Nevertheless, robust growth in activity and new orders helped to boost job creation, which were higher than the national level.”

“As we enter the final quarter of 2017, we start the countdown to the Christmas holidays. Businesses in the consumer goods and hospitality sectors will need to ensure they manage their working capital carefully, in order to take advantage of increased demand from events like Black Friday, Christmas and New Year.

“Last month our Working Capital Index report found that businesses in the West Midlands have £42bn tied up in excess working capital, which includes assets like stock and invoices. Cash that’s tied up in working capital can be released and invested in creating more stock or building capacity to meet higher demand over the festive season.”