Inflationary pressures threaten manufacturing sector

The latest seasonally adjusted Markit/CIPS UK Manufacturing Purchasing Managers Index (PMI) rose to a new high of 62.0 in January, from an upwardly revised reading of 58.7 in December.

According to the survey, manufacturing production rose for the 20th consecutive month in January, underpinned by quickening pace of new work.

Output growth hit a record high in the consumer goods sector, but also accelerated for capital and intermediate goods producers.

Companies reported improved demand from domestic and overseas markets, while new product launches, successful promotional activity and client restocking also contributed to new order growth.

Manufacturing employment also increased for the 10th successive month in January. Companies linked jobs growth to rising production requirements, improved market conditions, business development and the launch of new product lines. Part of the increase reflected efforts to combat rising levels of outstanding business, as backlogs accumulated for the third month in a row.

Inflationary pressures continued to build in January, with substantial increases signalled for both input costs and factory gate prices.