Good news for the UK economy: the UK manufacturing Purchasing Managers’ Index reached 62 in January, up from the 58.7 recorded in December.
The Markit/CIPS manufacturing Purchasing Managers’ Index expresses the health of the manufacturing sector, with any measure above 50 indicating expansion.
As well as showing strong manufacturing growth, the Index shows that although factory costs are rising, employment has risen at the fastest pace since 1992, when records began.
“This is a truly excellent survey that provides much needed, reassuring good news on the economy following the shock news that GDP contracted by 0.5 per cent quarter-on-quarter in the fourth quarter of 2010,” comments Howard Archer, chief UK and European economist for IHS Global Insight.
Indeed, the results show that manufacturing is outperforming most other sectors, leading the way through the recovery.
Yet both input and output prices have also surged to the highest levels of the Index’s history, with manufacturers passing on recent large increases in commodity costs.
These results add pressure on the Bank of England’s Monetary Policy Committee to increase the base interest rate, which would help to tackle inflationary pressures.
Rob Dobson, senior economist at Markit and author of the Markit/CIPS data, comments: “Manufacturers are still being buffeted by rising cost pressures with raw material prices rising at the steepest pace since the survey began in 1992.
“Increasing signs of these costs are being passed down the supply chain in the form of higher factory gate prices, the hackles of the hawks on the Bank of England’s onetary policy committee will no doubt be raised.”