The UK’s manufacturing sector surged to a record high during January this year, indicating a positive outlook for the economy, according to the latest data from the Purchasing Managers Index (PMI).
The new report by the Chartered Institute of Purchasing (CIPS) and Markit, the financial information services company, revealed that the manufacturing PMI rose to 62.0 last month, up from 58.7 in December 2010 – the highest reading since 1992.
However, the data also showed that inflationary pressures are continuing to grow, raising the likelihood that the Bank of England’s base interest rate would increase.
David Noble, chief executive at the CIPS said: “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."
According to the data, companies reported improved demand from both the domestic and overseas market, with the rate of increase in new export orders being among the fastest in the series history. However, manufacturers indicated that input prices had risen to the highest level in the index’s history, as the cost of chemicals, cotton, energy, food products, metals, packaging and paper peaked.
Rob Dobson, senior economist at Markit said: “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.”
© Crimson Business Ltd. 2011