British manufacturing grew slightly faster in January thanks to a modest recovery in export orders, but factories cut prices at the fastest pace since 2009 to drum up business, a survey showed.
Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) rose to 53.0 from 52.7 in December, beating a poll forecast for 52.6 and holding comfortably above the 50 mark that signals growth.
The figures suggest manufacturing output is rising at a quarterly pace of around 0.2 per cent, according to survey compiler Markit, only a slight improvement on the 0.1 per cent growth seen in the last three months of 2014.
“At this rate, the sector will provide little meaningful boost to the economy in the first quarter,” said Rob Dobson, senior economist at Markit.
Despite expanding last year at the fastest annual pace since 2007 over 2014 as a whole, Britain’s economy grew less than expected in the final three months of the year. Orders from both home and abroad came in faster last month, the PMI showed, with the new export orders index hitting a five-month high. With oil prices more than halving over the last six months to below $50 a barrel, prices paid by manufacturers for raw goods fell at the fastest rate since May 2009.
Correspondingly, producers cut prices charged to customers for the first time in 19 months and at the fastest pace since September 2009.
“Waning inflationary pressures will provide the Bank of England with leeway to push back the first rate increase to late 2015 at the earliest,” said Mr Dobson.
British consumer price inflation plunged to its lowest level since May 2000 in December and Band of England Governor Mark Carney has said it is likely to turn negative in the months ahead.