UK manufacturing has “bumper start” to 2017

The PMI posted 55.9 in January - just below December’s 30-month high of 56.1. The headline PMI has remained above the neutral mark of 50.0 for six straight months.

Markit said that output rose at the fastest rate since May 2014, as new order intakes expanded at a robust pace. But price pressures intensified as input cost inflation surged to a survey record high and output charges also increased at one of the steepest rates seen in the series history.

The domestic market was the prime source of new business wins last month. There was also an increase in new export orders, although the pace of expansion was noticeably slower than the previous month.

A rise in average purchase prices was driven by the weak sterling exchange rate and higher costs for commodities such as plastics, steel and oil, Markit added. Improved pricing power and efforts to pass on part of the cost increase led to a further sharp rise in average selling prices.

Rob Dobson, senior economist at IHS Markit, said: “UK manufacturers have reported a bumper start to 2017, but are also seeing prices rise at an unprecedented rate. Factory output growth accelerated to a 32-month high in January, as solid domestic demand continued to drive production volumes higher. There were signs that the boost to export orders from the weak exchange rate was waning, as growth of new business from abroad slowed sharply.”