Manufacturing expansion rate at record level, reports CIPS
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Rates of expansion in UK manufacturing new orders and employment accelerated to reach levels without precedent in the nineteen-year history of the Markit/CIPS UK Manufacturing survey leading to near-record growth in output.
At 62.0 in January, from an upwardly revised reading of 58.7 in December, the seasonally adjusted Markit/CIPS (Chartered Institute of Purchasing & Supply) UK Manufacturing PMI rose to a record high.
Companies reported improved demand from both domestic and overseas markets, while new product launches, successful promotional activity and client restocking also contributed to new order growth. The rate of increase in new export orders was amongst the fastest in the series history. Latest growth reflected higher sales to the US, emerging markets, Scandinavia and Australia.
Manufacturing employment increased for the tenth successive month in January. Companies linked jobs growth to rising production requirements, improved market conditions, business development and the launch of new product lines. Part of the increase reflected efforts to combat rising levels of outstanding business, as backlogs accumulated for the third month in a row.
However, inflationary pressures continued to build, as input costs and output prices also rose at, or near to, series record highs.
Average purchase prices rose at the steepest pace in the survey history, with over three-fifths of companies reporting an increase. Manufacturers indicated a vast array of inputs had risen in price, including chemicals, cotton, energy, food products, metals, packaging, paper and timber.
Rising output requirements and efforts to protect against expected future price increases led to a near survey record increase in purchasing activity. Subsequently, holdings of raw materials rose at the quickest rate since data were first collected in January 1992. Meanwhile, stronger demand for raw materials led to a marked increase in vendor lead times.
David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, commented: "Manufacturers will be watching intently to see how the Government and Bank of England move to tackle the issue of rising inflation, and hoping for stimulation to encourage continued growth in a sector which is currently leading the way towards UK recovery. A very different picture from last year."
