U.K. manufacturing sector remains strong in January, PMI at 55.9

The manufacturing sector of U.K. began 2017 on a strong foot. The seasonally adjusted PMI came in at 55.9 in January, just a few ticks below December’s two-and-a-half year high of 56.1. The headline PMI stays above the neutral mark of 50 for six consecutive months. The recent growth of manufacturing production was supported by a strong rise in new order intakes. The pace of growth in new business eased after December’s high, but stayed quite above the long-run survey average.

The domestic market was the main source of new business wins in January. There was also a moderate rate in new export orders; however, the rate of growth was quite slower than during the earlier survey month.

Sector wise, the most robust growth of output and new orders was seen in intermediate goods producers. The consumer and investment goods sectors also recorded additional strong expansions of new business and production. Average purchase prices grew at the steepest pace in the quarter-century history of the survey, driven by the weak sterling exchange rate and increased costs for commodities.

In the meantime, improved pricing power and attempts to pass on part of the rise in costs resulted in an additional sharp rise in average selling prices. Supplier price hikes also had a significant role in increasing average purchasing costs in January. Firms showed that higher demand for raw materials was examining the capacity at vendors and leading to shortages of certain inputs.

Manufacturing employment was up for the sixth consecutive month, although to a lesser degree from a month earlier. Confidence increased to an eight-month high in the month. Nearly 51 percent of respondents anticipate output to increase in the next 12 months, reflecting new market opportunities and planned product launches, said Markit.