02 February 2004 | Gareth Mytton
The UK manufacturing sector maintained its rapid growth in January, according to the latest PMI figures.
The purchasing managers' index (PMI) - a composite indicator of economic activity from CIPS and NTC Research, where 50 means no change on the previous month - was unchanged from December's four-year high of 56.
Output (58.3) rose to meet new and pre-booked orders, while new orders (60.2) indicated strong demand at home and abroad (56.2, with the US, China and Japan named in particular).
There were widespread signs of capacity constraints, as companies cut backlogs by taking on more staff and using existing stocks. Supply shortages, demonstrated by worsening delivery times, contributed to a drop in stocks of purchases (46.6) and a slowdown in quantity of purchases (54.5).
The weak dollar led to strong competition from cheaper US imports. Only 12.6 per cent of firms passed higher input costs (60.6) on to customers. Rising commodity prices - with metals mentioned for a second consecutive month - and the strong euro were blamed.
In the euro-zone, manufacturers enjoyed the strongest growth for three years in January. The PMI stood at 52.5, boosted by rises in output (54.6) and new orders but held back by falling employment.
And in the US, the Institute for Supply Management's (ISM) January manufacturing report on business put the PMI at 63.6. The US manufacturing recovery is still uneven, with some sectors reporting little evidence of a comeback.
* More information on the UK and euro-zone PMIs is available at www.ntc-research.com
. The full text of the ISM report on the US manufacturing economy for January, and previous reports, is available at http://www.ism.ws/ISMReport/index.cfm.