Manufacturing picks up despite strong sterling
UK manufacturing seems to have picked up a bit more in January instead of relapsing under the weight of some of the highest sterling exchange rates for many years.
The Purchasing Managers Index (PMI), the first indicator of conditions in January, edged up from 52 to 52.8, confounding market expectations of a fall. Readings above 50 signal expansion, so these are hardly boom conditions, but some momentum seems to be building up.
The orders index rose from 53.2 in December to 54.2 in January and the index of export orders went up from 51.8 to 53.4, suggesting that demand is strong enough at the moment to overcome the exchange rate effect.
The downside is that the index of output prices rose from 53.5 to 54.2 on a resurgence of materials costs.
The Bank of England will not be pleased with that but its Monetary Policy Committee will take more interest in next Mondays PMI indicator of prices in services, a much bigger part of the economy, when it meets to set interest rates.
The eurozone PMI index of manufacturing, which has been stronger than the UK, edged down from 56.5 in December to 55.5 in January.