Rising new orders helped British manufacturing scale new heights in January, according to a closely watched survey conducted by Markit.
The Markit Purchasing Managers Index (PMI) touched 62 marks in January from 58.7, recorded in December 2010 and the highest reading since the survey was commissioned in 1992.
However, inflation remains a concern as input costs rose to 84.9 in January from 80.3 and 73.8, recorded in December and November 2009 respectively. Any score above 50 indicates the segment is expanding.
One of the brightest developments have been the employment sub-category crawling up to 58.8 from 57.8 in December, indicating the private sector has added jobs when the public sector is expected to cut jobs in the days ahead.
“Growth is also generating jobs, with headcounts rising at the steepest rate for over ten years”, said Chris Williamson of Markit – the company that provided the data.
“These PMI figures are unprecedented and should bring the government some cheer, but while manufacturing continues to outperform the wider economy, it is by no means immune from diving consumer confidence, languishing house prices and a struggling service sector. The question for manufacturers is how to grow significantly in a persistently low- to-no growth UK economy, particularly those businesses primarily focused on the domestic market”, said Graeme Allinson – Head of manufacturing lending at Barclays.
Commenting on the findings, Rob Dobson – 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. New orders and employment both rose at survey record high rates, while output expanded at the fastest pace since the mid-1990s. Robust demand was supported from both the domestic and overseas markets, suggesting that what we are seeing is not just an export orientated recovery, but there are also signs of life in domestic consumer and business spending”.
Going by Markit’s data, economists concur that the annualised growth rate for manufacturing should be around 2.5 percent.
Manufacturing further gained from a weaker Pound as exports grew – albeit a tad slower than December. December export sub-category clocked 59.6, which dropped to 58.9 in January.
A separate survey showed the eurozone also showing robust growth in manufacturing with Germany leading the pack and Spain and Ireland bouncing back strongly.