Business activity is picking up in the West Midlands as firms continue to reopen following Covid-19.
The latest NatWest PMI 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 64.0 in June.
While this figure is slightly down from the 65.5 recorded in May, it is the third-quickest rate of expansion since the series started in January 1997.
Firms across the region linked the growth to a pick-up in sales, strengthening demand conditions and businesses reopening.
The data also found a fourth successive monthly increase in new orders at private sector firms.
Sales rose in line with looser Covid-19 restrictions, better demand conditions and improved market confidence.
June also saw a monthly rise in employment - the sharpest and strongest increase in 24 years.
The West Midlands registered the quickest upturn in jobs of all 12 monitored regions.
Most Read
This upturn was most prevalent in the manufacturing and service sectors and was associated with a pick-up in new business and associated capacity expansion efforts.
How NatWest is supporting BusinessLive
NatWest is the national partner of BusinessLive.
The banking group is teaming up with BusinessLive on a series of events throughout the year aimed at entrepreneurs and business leaders.
Alongside a wide range of banking services, NatWest offers businesses specialist sector knowledge in areas such as manufacturing and technology, as well as access to specialist entrepreneurial support.
West Midlands firms remained optimistic that the output would rise in the year ahead amid expectations of a reduction in Covid-19 cases and the vaccination roll-out.
The overall level of positive sentiment fell to a four-month low, but remained elevated by historical standards. Some companies were worried about cautious investment decisions and travel restrictions.
Outstanding business volumes at private sector firms in the West Midlands continued to rise in June, stretching the current sequence of growth to four months.
Moreover, the rate of backlog accumulation was sharp and the third-fastest since November 1999.
Companies indicated that capacities came under pressure due to substantial increases in new work, raw material shortages and lengthening supplier delivery times.
Don’t miss
The West Midlands was placed third in the regional rankings for growth of backlogs, behind Wales and the North West.
Average cost burdens at West Midlands companies rose in June, as has been the case on a monthly basis for a year.
Having quickened from May, the rate of inflation was steep and the third-fastest on record - with manufacturing firms observing a sharper rise in input costs that their service counterparts.
The latest increase is being linked to limited freight supply and global shortages of raw materials.
Regionally, only Northern Ireland recorded a stronger rate of input cost inflation than the West Midlands.
Demand conditions remained conducive to price increases, with selling charges rising for the 13th month running in June.
Furthermore, the rate of inflation was sharp and the fastest since July 2008.
Survey participants commonly stated that higher charges stemmed from rising cost burdens and, in line with the trend for input costs, the faster rate of inflation for charges was registered in the manufacturing industry.
John Maude, NatWest Midlands and East Regional Board, said: "The economic recovery of the West Midlands extended to June, as the easing of Covid-19 restrictions earlier in the year continued to boost demand for goods and services.
"Notably, business activity again expanded at a near-record pace. The strength of the rebound caused capacity pressures among local firms, who responded to rising backlogs by hiring additional staff at an unprecedented monthly rate.
"The West Midlands was the top performer on a regional basis for employment growth."
He added: "PMI data revealed that local firms retained pricing power in July, with many businesses able to share additional cost burdens with their clients via increases in selling prices. Rates of inflation of both input costs and output charges were the third-highest in the respective series histories."