MNI: UK January CIPS Manufacturing PMI Slows To Six-Month Low

--Input and Output Costs Accelerate; Weighs on Firms 

By Jamie Satchithanantham

     LONDON (MNI) - UK manufacturing continued to expand into the first month of

2018, but at a slower pace, the IHS Markit/CIPS survey showed.

     The headline January Manufacturing PMI came in at 55.3, a six-month low,

down from December's revised 56.2 result (prev. 56.3). 

     The PMI has now declined for two consecutive months, continuing to back off

from a 51-month high seen in November, so the results of the last two months

could possibly represent a correction in the trend. It remains above the

long-run average of 51.7. 

     However a slowdown would be consistent with official data with the ONS

pencilling a halt to the near 10-month run of successive positive growth m/m

results in December.      

     A slowdown in the pace of incoming orders and output was compounded by

price pressures at both the input and output levels. 

     While production continued to expand in January on the back of new orders

from both domestic and foreign clients, the pace of the new orders slowed to a

seven-month low. This appeared to mainly be concentrated among domestic clients,

given rates of foreign demand picked up at one of the quickest rates in four

years, according to IHS Markit.  

     --INPUT PRICES HIGHER

     The subsequent demand and shortages for key inputs applied upward pressure

on input prices. The purchasing prices indicator rose at the fastest rate in 11

months and "to one of the greatest extents in survey history".  

     This filtered through into output prices with the level of prices charged

in January rising to a level last seen higher in April 2017.  

     UK manufacturers maintained a positive outlook, with over 55% forecasting

production to be higher in one year's time. Optimism reflected improved market

conditions, global economic expansion, fuller order books, export opportunities,

investment in new equipment and planned product launches

     "The latest survey is consistent with production rising at a solid

quarterly rate of around 0.6% in January, with jobs also being added at a faster

pace," Rob Dobson, Director at IHS Markit, said.

     "However, output growth has slowed sharply since last November's high, and

the more forward-looking new orders index has slipped to a seven-month low. The

trend in demand will need to strengthen in the near-term to prevent further

growth momentum being lost in the coming months," he added. 

     --IN-LINE WITH US

     The slight slowdown in January activity in the UK was also witnessed across

other major economies.

     Earlier on Thursday the IHS Markit Eurozone Manufacturing PMI came in a

point lower at 59.6, easing from the near-record levels set towards the tail-end

of last year, but was still among the strongest results since the survey began.

     On Wednesday, an equivalent measure of US manufacturing conditions -- The

Chicago Business Barometer -- also moderated, falling to 65.7 from a previously

revised 67.8. In this report similar forces were also at play. The headline

index's downfall was largely due to a fall-back in New Orders while the Prices

Paid component rose to a four-month high of 72.1.   

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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