LONDON: U.K. manufacturing activity grew strongly in January, slowing only slightly from a 2 1/2-year high in December, a survey showed Wednesday, suggesting the sector was likely to continue making positive contribution to economic growth in the first quarter of 2017. The purchasing managers index for the British manufacturing sector stood at 55.9 in January, financial information firm IHS Markit Ltd. said. The expansion was underpinned by a solid increase in new order intakes, mainly from the domestic market. The headline PMI has now remained above the 50-point mark indicating expansion for six straight months, IHS Markit said.
Improving global market conditions and the weakened sterling also drove a modest increase in new export orders. Since June 23, when 52% of Britons voted to leave the European Union, the pound has fallen sharply, boosting British exporters’ competitiveness. However, the positive impact of sterling’s devaluation on exports appears to be waning, said Rob Dobson, senior economist at IHS Markit. Meanwhile, producers’ input cost inflation as measured by the survey accelerated to the highest since data were first collected in 1992, with a majority of producers citing the pound’s fall as the reason. “With cost pressures increasingly feeding though to higher selling prices at factories, it looks inevitable that consumer price inflation will rise further in coming months,” Mr. Dobson said. Consumer price inflation hit an over two-year high in December, and the Bank of England expects it to overshoot its 2% target this year.
