Britain: Half-year high for manufacturing in January

Britain’s manufacturing output grew at the fastest pace in six months in January as pressure on the global supply chain began to wane and factories met Omicron’s challenges.

The manufacturing PMI of IHS Markit pointed out that the production index increased to 54.5 points in January – the highest level since July 2021 – compared to 53.6 points in December, higher than the initial estimates for 53.8 points.

The factories started hiring workers at the second fastest rate in the last 11 years, while they also reported some easing of inflationary pressures.

“Although supply chain constraints continued to hamper growth, there were indications that they had exceeded the ceiling, a factor that contributed to a slight easing of inflation,” IHS Markit said.

The easing of price pressures will be welcomed by the Bank of England, which is widely expected to raise interest rates for the second time in less than two months amid rising inflation concerns.

The PMI hit a four-month low of 57.3 points in January from 57.9 points in December, representing the lowest increase in new orders since February 2021 as well as faster deliveries from suppliers, a factor pushing indicator as under normal conditions is an indication of excess capacity.

The British economy regained its pre-crisis size in November, and many economists estimate that it shrank by 0.5% in December and January, when an increase in cases hit hospitality and office workers had to work remotely.