UK manufacturing PMI shows impressive rise

Posted on 1 Mar 2012 by Tim Brown

The Markit/CIPS Purchasing Managers’ Index for the manufacturing sector registered an eight-month high in January.

The figure posted at 52.1 rose from November’s below 50-mark of 49.7. Output growth also rose quickly as input costs fell and inflation slowed.

David Noble, CIPS CEO said: “The UK manufacturing sector has sprung to life in the first month of 2012 to defy any economic gloom, but it is too early to say whether this trend is sustainable.

“The marked decline in input prices is good news for the sector’s overall profitability. The boost in output is also welcome, but in reality is bolstered by manufacturers working through existing backlogs, which can only be a short-term fix.

“In the long-term, it’s looking like businesses will need to refocus on emerging growth markets outside the weaker eurozone to achieve sustainable growth even though spending was at a higher level in the UK compared to last month.

“If emerging markets are the future, breakdowns in supply owing to port closures and the impact of flooding in Thailand underline the need to ensure international supply chains are sufficiently flexible, robust, with an understanding of risk mitigation to maintain business continuity.”

Commenting on today’s PMI data, Andrew Johnson, senior economist at EEF, the manufacturers’ organisation said: “Manufacturers have left behind the difficult period at the end of last year and are cautiously optimistic about their prospects. European demand is likely to remain subdued so companies are searching out new sources of demand in markets. In particular demand in the United States is strengthening, China is recovering and Indonesia, Brazil, and the Middle East are presenting new opportunities.”