British manufacturing activity was the strongest in seven months during February with growth in output and new orders strengthening further, creating more jobs, results of a survey by Markit Economics showed Monday.
The seasonally adjusted Markit/CIPS Purchasing Manager's Index for the manufacturing sector climbed to 54.1 in February. Economists had forecast a score of 53.3. January's reading was revised up to 53.1 from 53.
A PMI reading above 50 suggests expansion in the manufacturing sector. The index has now remained above the 50 mark for two years, the report said.
Output growth accelerated for a third straight month to its highest rate since June 2014, led mainly by strong outcome in the consumer goods industry. Solid expansions in intermediate and investment goods production also contributed.
New orders growth was largely driven by domestic clients in February. Meanwhile, export demand declined for the fourth time in the past five months, dampened by subdued conditions in key markets and the sterling exchange rate.
Employment in the factory sector increased for a twenty-second successive month and at the fastest pace in three months. It was broadly in line with the average for the current sequence of expansion. Jobs increased at both small and medium enterprises as well as large-sized firms.
"Output is now rising at a quarterly pace close to 0.5% and job creation is running at a rate of five thousand new positions filled per month," Rob Dobson, senior economist at Markit said. "This reinforces the picture of a broader growth revival in the UK so far in the opening quarter."
On the cost front, input costs declined significantly, which was only slightly less than January's 68-month record fall, as the sharp decrease in oil prices earlier in the year continued to feed through. Companies also reported lower costs for chemicals, energy, food raw materials, oil and its by-products, plastics and timber. Further, the sterling exchange rate also reduced costs of some imported goods.
Output prices fell for a second straight month due to falling input prices and rising competitive pressures.
"Waning inflation therefore looks set to continue to provide leeway for the Bank of England to push back that first rate increase until next year," Dobson said.
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