Today’s PMI figures show a modest upturn in UK manufacturing output in defiance of wider European doldrums
Although today’s Manufacturing Purchasing Managers’ Index data, compiled by Markit/CIPS, edged down slightly overall to 50.8 in January from 51.2 in December 2012, a subindex measuring change in output revealed a rise from 53.4 to 54.2 over the same period.
In addition, the Markit/CIPS survey found that new orders for manufacturing companies rose for the third consecutive month in January.
The news has been welcomed with cautious optimism by economists, though Rob Dobson, the Markit economist said that due to the small contribution of manufacturing to the UK’s overall GDP “The survey will do little to assuage fears of a triple-dip recession unless accompanied by an improvement in the services sector.”
Carl Williamson manufacturing sector lead at Lloyds Bank Commercial Banking was more positive, highlighting the UK sector’s ability to defy the economic concerns of the eurozone.
Despite these worries “order books and production have held up well in response to a revival in domestic orders,” he said.
Other commentators, including Lee Hopley, chief economist at EEF, focused on the potential of a weak Sterling to benefit exporting manufacturers in certain sectors.
Mike Rigby, head of manufacturing at Barclays agreed with Ms Hopley’s analysis saying ““It’s been a good start to the year for UK manufacturing with production and new orders holding well. The weakening of Sterling against the euro should, on balance, benefit UK exports.”
He cautioned however, that “the general outlook remains far from certain, both at home and in key export markets”.
Overall economists felt the data reflect a modest recovery of confidence among UK manufacturers and Ms Hopley said: “This could suggest this year will be a better one than last for the sector.”