Andrew Hajduk
UK Business News, 01 February 2012

UK Manufacturing PMI reached a 8 month high in January according a survey by Markit/CIPS.  UK manufacturing PMI rose to 52.1 in January, from a revised reading of 49.7 in December.   Output growth accelerated to a ten-month high while input cost fell.

The survey shows that output expanded at the fastest pace since March, with new orders rising following a period of contraction and payroll number stabilising.  Cost pressure also continued to ease, as average input prices fell for the third straight month.

Manufacturing production expanded for the second successive month in January.  This expansion was supported by growth of new orders and the clearance of backlogs of work.  The survey shows that companies reported an increased willingness to spend among some UK clients and a further increase in new export orders.  Output showed its first increase since April 2008 leading to a slight rise in the stocks of finished goods.

Demand from overseas rose for the second month running with reports of improved order inflows from customers in Brazil, China the Middle East and the US.  The rate of increase was only moderate however, and less marked than one month earlier.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply commented:

“The UK manufacturing sector has sprung to life in the first month of 2012 to defy any economic gloom, but it is too early to say whether this trend is sustainable. 

“The marked decline in input prices is good news for the sector’s overall profitability. The boost in output is also welcome, but in reality is bolstered by manufacturers working through existing backlogs, which can only be a short-term fix. 

“In the long-term, it’s looking like businesses will need to refocus on emerging growth markets outside the weaker Eurozone to achieve sustainable growth even though spending was at a higher level in the UK compared to last month. 

“If emerging markets are the future, breakdowns in supply owing to port closures and the impact of flooding in Thailand underline the need to ensure international supply chains are sufficiently flexible, robust, with an understanding of risk mitigation to maintain business continuity.

See the full report on the Markit/CIPS website

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