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UK manufacturing output shows growth in January

Manufacturers in the UK increased their output in the first month of 2013. Factory output grew at the fastest pace since September 2011, a new monthly survey shows.

The latest Purchasing Managers’ Index, compiled by the Chartered Institute of Purchasing & Supply (CIPS) and financial information services firm Markit, reveals that UK manufacturing production continued to expand as a result of a modest increase in new orders and ongoing efforts to clear order backlogs.

For the second month running the seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) remained above the neutral 50.0 mark, which separates growth from contraction, although it edged down to 50.8 in January from December’s 15-month high of 51.2.

Companies taking part in the PMI survey in January reported a marginal increase in new orders for the third month in a row, with improved inflows of new business from the domestic market offsetting a further reduction in new export orders. Overseas orders fell for the 13th successive month, which was attributed to the ongoing weakness of markets within the eurozone.

The labour market in the UK manufacturing sector stabilised further in January, following job losses throughout much of 2012.

Orders for consumer goods were particularly strong last month. Intermediate goods producers also increased their output, but manufacturing of investment goods such as factory equipment fell for the eighth time in the past nine months.

Manufacturers saw average input prices rise for the fifth successive month in January, with higher prices on chemicals, energy, food products, metals, packaging and plastics. Part of the increase in costs was passed on to customers in the form of higher average selling prices, the PMI report said.

The increase in manufacturing output has been welcomed by economists, after the UK economy contracted in the fourth quarter of 2012. However, Rob Dobson, senior economist at Markit, pointed out that manufacturing only accounts for around 10% of the economy, so survey will do little to allay fears of a triple-dip recession unless there is also an improvement in the services sector.


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