Manufacturing in growth as PMI breaks 50 mark again

New orders increased and steadying job losses helped PMI hit 50.8 in January, edging lower from December's 15-month high of 51.2. Manufacturing output expanded at the fastest pace since September 2011, mainly reflecting a robust increase in consumer goods production. Companies reported a marginal increase in new orders for the third successive month, which some attributed to improved inflows of new business from the domestic market. This offset a further reduction in new export orders, which fell for the thirteenth month in a row. Companies linked lower volumes of new work from overseas to the ongoing weakness of markets in mainland Europe. The cost of raw materials rose for the fifth successive month, with companies reporting higher prices paid for chemicals, energy, food products, metals, packaging and plastics. Part of the increase in costs was passed on via higher average selling prices. Rob Dobson, senior economist at survey compiler Markit said that the growth could help lift the economy from the slide back into contraction late last year. "A small gain in employment also suggests that some firms are becoming slightly less focused on cost reduction amid signs of stabilising order books, which should hopefully lead to further production growth in February," he added. On falling exports, he suggested the weakness of Sterling and firmer demand in markets such as Germany and China may filter through and lift sales in coming months. David Noble, CEO at survey partner CIPS, warned that underlying factors suggested deep rooted problems remained, economic weakness in Europe being the primary issue affecting the industry. Lee Hopley, chief economist at EEF said the new year pick up in output contrasted with many other parts of Europe, adding that there were reasons to believe the expansionary trend could be maintained in the coming months.