1 February 2011
| Angeline Albert
UK manufacturing is driving
the nation’s economic recovery, rising to a record high at the start of 2011.
The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) recorded 62 in January, up
from 58.7 in December. The pace of growth in new orders and employment was a
record, while output expanded at its fastest since the mid-1990s.
UK companies reported improved demand from
domestic and overseas markets. Client restocking also contributed to the rise
in new orders. Employment in the sector rose for the tenth successive month,
with rising production requirements, improved market conditions and the launch
of new product lines.
Inflationary pressures continued to build in
January, with substantial increases signalled for input costs and factory gate
prices. Manufacturers indicated many inputs had risen in price including
chemicals, cotton, energy, food products, metals, packaging, paper and timber.
Rob Dobson, survey author and
senior economist at Markit, said:
“Manufacturers made a
record-breaking start to 2011, confirming that the sector remains one of the
brighter spots of the UK economy. Manufacturers are still being buffeted by
rising cost pressures, however, 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 monetary policy committee will no
doubt be raised.”
The PMI showed manufacturers are
accumulating raw materials to guard against price and supply pressures. David
Noble, CEO at CIPS, said: “The significant
increase in purchasing activity shows that manufacturers are feeling confident
about the future and ensuring they have sufficient stock to meet increased
orders. It’s also apparent that most are looking to build up inventories and
make certain that they’re not caught short in the face of raw materials
shortages.”
The Markit
Final Eurozone Manufacturing PMI also rose to a nine-month high of 57.3
in January, up from 57.1 in December. Input price inflation accelerated in all
Eurozone countries. Part of the cost increase for fuel, food and metals
reflected demand exceeding supply, which was highlighted by another sharp
deterioration in average supplier
delivery times.
