2 Feb 2015
UK manufacturing output expands for twenty-third consecutive month
FXStreet (London) - The seasonally adjusted Markit/CIPS Purchasing Manager’s Index rose to 53.0 in January, creeping higher than December’s revised reading of 52.7 (upward-revised from 52.5).
Markit reported that manufacturing output expanded for the twenty-third consecutive month in January, underpinned by a further increase in incoming new orders. The domestic market remained the prime driver of improved new order inflows. Solid output growth was registered at both intermediate and investment goods producers. However, the rate of growth in the consumer goods output ground to a near standstill pace.
Rob Dobson, Senior Economist at survey compilers Markit commented: “UK factories reported a welcome upturn in growth of output and order books at the start of the year, but producers clearly remain stuck in a low gear. The rate of expansion remains muted, however, with output rising at a quarterly pace of around 0.2 percent in January, barely improving on the 0.1% registered in the final quarter of last year. At this rate, the sector will provide little meaningful boost to the economy in the first quarter.
“The domestic market remains the main growth driver, as the UK economic recovery provides a steady stream of new business. There were also signs of improvement in overseas markets, with new export orders posting the first meaningful gain for five months, but it still looks as if lacklustre demand from the Eurozone in particular remained a headwind for British manufacturers. This could soon change, however, if quantitative easing by the ECB has the desired effect of boosting demand in the euro area.
“Continued output growth and rising order inflows also encouraged manufacturers to raise employment. At present, the sector is still adding jobs at a pace of around five thousand per month.
“The big mover in the latest survey was the input prices index, as the recent slump in oil prices saw manufacturers’ purchasing costs fall at one of the fastest rates seen over the past 16 years. Selling prices also fell for only the second time in five years. Waning inflationary pressures will provide the Bank of England with leeway to push back the first rate increase to late-2015 at the earliest.”
Markit reported that manufacturing output expanded for the twenty-third consecutive month in January, underpinned by a further increase in incoming new orders. The domestic market remained the prime driver of improved new order inflows. Solid output growth was registered at both intermediate and investment goods producers. However, the rate of growth in the consumer goods output ground to a near standstill pace.
Rob Dobson, Senior Economist at survey compilers Markit commented: “UK factories reported a welcome upturn in growth of output and order books at the start of the year, but producers clearly remain stuck in a low gear. The rate of expansion remains muted, however, with output rising at a quarterly pace of around 0.2 percent in January, barely improving on the 0.1% registered in the final quarter of last year. At this rate, the sector will provide little meaningful boost to the economy in the first quarter.
“The domestic market remains the main growth driver, as the UK economic recovery provides a steady stream of new business. There were also signs of improvement in overseas markets, with new export orders posting the first meaningful gain for five months, but it still looks as if lacklustre demand from the Eurozone in particular remained a headwind for British manufacturers. This could soon change, however, if quantitative easing by the ECB has the desired effect of boosting demand in the euro area.
“Continued output growth and rising order inflows also encouraged manufacturers to raise employment. At present, the sector is still adding jobs at a pace of around five thousand per month.
“The big mover in the latest survey was the input prices index, as the recent slump in oil prices saw manufacturers’ purchasing costs fall at one of the fastest rates seen over the past 16 years. Selling prices also fell for only the second time in five years. Waning inflationary pressures will provide the Bank of England with leeway to push back the first rate increase to late-2015 at the earliest.”