UK manufacturing maintains strong start to 2011

The seasonally adjusted Markit/CIPS UK Manufacturing PMI posted 61.5 in February, unchanged from January's series record high. The PMI has now remained above the neutral 50.0 mark for nineteen successive months. Production rose at a strong pace in February, underpinned by a substantial increase of incoming new orders. Output growth hit survey record highs at consumer and intermediate goods producers. Although still solid, the rate of expansion in the capital goods sector eased sharply since January. Stronger demand was seen from both domestic and export markets, reflecting improved market confidence, clients restocking and the launch of new product lines. New export orders rose for the fifth month running and at the third-fastest rate in the series history. Companies reported stronger inflows of new orders from the US, China, Germany and the Middle-East. Jobs growth in the manufacturing sector accelerated to a new survey record high rate in February. Companies reported that increased prices for cotton, energy, metals, oil, plastics and timber had led to a further substantial rise in average purchasing costs. The rate of increase was only slightly below January's peak. Meanwhile, output prices rose at the second-fastest rate in the survey history, as companies passed on part of the increase in raw material prices. Manufacturers also linked input cost rises to increased global demand for a number of items and to ongoing supply-chain shortages. Purchasing activity rose markedly in February, with the extent of the increase only slightly less marked than January's sixteen-and-a-half year peak. A combination of higher demand and low vendor stock holdings led to further lengthening of suppliers' lead-times.