19 February 2004 | David Arminas
Manufacturing maintained its strong recovery in January, based on improved export orders and strong employment, according to the latest CIPS/Reuters purchasing managers' index.
The PMI remained at 56, the same as in December when it hit its highest level since December 1999, and well above the 50 mark that distinguishes expansion from contraction for the sector.
The measure for new orders rose from 58 in December to 60.2 in January, led by strong export orders to the US, China and Japan.
January was also the first time in five years that the employment index was above 50 for two months in a row, meaning firms are hiring more employees.
The rising employment index is a particularly good indicator that the recovery is stronger than most economists feared it would be at the end of last year.
Roy Ayliffe, director of professional practice at CIPS, said manufacturing looks set for stability this year.
But official figures from National Statistics showed manufacturing output fell by 0.1 per cent in December from November. Production from technology and telecommunications companies was the lowest since the dotcom bubble burst four years ago.
The services sector also had continued growth for January, up from 58.5 in December to 59.8, according to the CIPS/Reuters Business Activity Index. This was the sharpest rise since June 1997.
The construction PMI slipped marginally, to 56.3 from 59.2.