A survey has shown that British manufacturing activity growth improved unexpectedly in January, accelerating for the first time since September, boosted by a pick-up in production and new orders.
But analysts said economic and monetary policymakers might be concerned to see input and factory gate prices picking up again. The data reinforced expectations the Bank of England may raise borrowing costs again soon after last month's surprise hike.
The CIPS/RBS Purchasing Managers' Index rose to 52.8 last month, up from 52 in December. Any reading above 50 means an expansion in activity.
'Manufacturing has shaken off some of its sluggishness at the start of 2007,' said RBS chief economist Andrew McLaughlin. New export orders picked up last month with a reading of 53.4, against 51.8 in December. Overall new orders accelerated to register 54.1 from 53.2 in the previous month.
Input cost inflation rose for the first time in five months, accelerating to 61.4 in January from 59 in December. Output prices also picked up to 54.2 from 53.5. While CIPS/RBS said manufacturers continued to face marked inflation in their purchasing costs, the survey noted the input price reading was well below the average for 2006.
