Manufacturing PMI hits 15-year high
February 24th 2010

Hopes that the recession may be coming to an end were raised with the CIPS/Markit Purchasing Managers’ Index (PMI) for manufacturing showing a 15-year high.

The figure was posted at 56.7 in January, compared with last month's upwardly revised 54.6  and was the highest since October 1994. With new orders rising at the fastest pace for six years, and new export orders growing, employment also increased slightly.

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: “This is very positive news and a great way to start the year. Although the manufacturing sector represents a smaller proportion of total UK GDP than 10 or 20 years ago, it is still a very important part of the economy. It is therefore encouraging to see such strong growth and it suggests we are coming out of recession much quicker than previously feared.

“One of the most encouraging aspects of this month’s PMI is the turnaround on the jobs front. For the first time in 21 months there has been an increase in employment, albeit only a slight one. Employment is usually a lagging indicator so it suggests that firms are becoming much more confident about the future. 

“Inevitably, though, purchasing managers voiced some notes of caution.  The spike in purchasing activity was attributed to inflationary concerns and delivery delays – rather than increased client demand. Also, the highly competitive nature of this still fragile market meant firms shied away from raising their selling prices to a sufficient extent to fully cover cost increases.”