UK manufacturing expansion strengthened marginally in February as stretched supply chains and rising costs weighed on growth.
The seasonally adjusted CIPS Purchasing Managers’ Index, or PMI, rose to 55.1 in February from 54.1 in January, survey data from IHS Markit showed Monday. That was above the flash estimate of 54.9.
A reading above 50 suggests growth in the sector and the PMI has signaled growth for nine months in a row.
Output growth was the slowest in the current nine-month sequence of increase. New orders grew marginally after a slight decrease in January, due to improvement in domestic demand and export business. Employment rose at the quickest pace since June 2018.
Supply chain disruptions and raw material shortages pushed input cost inflation to its highest rate for over four years. Subsequently, output prices rose at the fastest pace since January 2018.
Business optimism rose to a 77-month high in February, with over 63 percent of companies reporting that they expect output to be higher in one year’s time, the survey said.
Continued recovery from the pandemic, reopening of the global economy including less transport restriction, and reduced Brexit uncertainties boosted confidence.
Survey data were collected during February 11-23.
“With current constraints likely to continue for the foreseeable future, pressure on prices and output volumes may remain a feature during the coming months,” IHS Markit Director Rob Dobson said.
“That said, improved domestic demand as lockdown restrictions ease and a further rise in manufacturers’ optimism are reasons to hope brighter times are on the horizon, and have already supported a modest rebound in staffing levels since the turn of the year.”
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