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1 February 2012 | Adam Leach
The new year got off to a good
start for British manufacturers as activity in the sector hit its highest level
since March 2011, according to today’s figures.
The Markit/CIPS Manufacturing PMI
for January recorded a figure of 52.1 for the month; a stronger performance
than December’s revised figure of 49.7 (the original score was 49.6). The
expansion in activity came as production rose for the second consecutive month
and was joined by a rise in new orders and the completion of work backlogs.
Particularly positive for the
sector was the finding that manufacturers are seeing an increased willingness
to spend by UK clients and a boost in export orders. Raised output, reported
for the first time since April 2008, saw stocks of finished goods increase.
Manufacturers also reported lower input costs as commodity prices eased and, as
a result, output costs rose at their slowest rate for 27 months.
However, owing to shortages of
certain inputs and shipping difficulties, vendor lead times lengthened for the
third consecutive month. Manufacturers reported a fall in stocks and reduced
holdings in the business to ensure stable cash flow.
Rob Dobson, senior economist at
Markit, said: “Manufacturing was a key area of weakness which caused the UK
economy to contract in the final quarter, so this surprising rebound in January
means a return to recession is by no means a certainty.”
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
“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.”
South Africa also saw a return to
growth in purchasing activity as the Kagiso PMI for January reported a figure
of 53.2, stronger than December’s performance of 49.4. The sector’s increase in
activity, the highest since June last year, was supported by a 9.0 rise in new
sales orders and a 3.9 rise in business activity.