The start of 2018 saw a further easing in the rate of expansion of the UK manufacturing sector.
At 55.3 in January, the seasonally adjusted IHS Markit/CIPS Purchasing Managers' Index (PMI ) was down further from November's 51-month high and at its lowest level since June last year, although it remained well above its long-run average of 51.7.
Manufacturing output continued to rise at a solid pace, although the rate of expansion eased to a six-month low.
Higher production reflected rising new order intakes, albeit the slowest in seven months, which increased through robust demand from both domestic and export clients.
Sector data signalled solid increases in output and new orders across the consumer, intermediate and investment goods sectors. Rates of expansion were higher in the latter compared to those at consumer and intermediate goods producers.
January saw the trend in new export order inflows strengthen. Foreign demand improved at one of the quickest rates over the past four years. There were reports of increased sales to clients in North America, China, mainland Europe, the Middle East and Japan.
One consequence of the upturn was an upsurge in price pressures. On the cost side, increased demand for inputs led to improved supplier pricing power and shortages of raw materials, resulting in a marked acceleration in input cost inflation.
Purchase prices rose at the fastest rate in 11 months and to one of the greatest extents in the survey history. Companies reported a wide range of raw materials and commodities as up in price, including chemicals, food products, metals, oil, paper and plastics. Part of the increase in costs was passed on to clients in the form of higher selling prices.
January saw the steepest increase in output charges since April of last year. Input buying activity among UK manufacturers rose for the eighteenth successive month, with the rate of increase remaining marked. Some companies reported bringing forward planned purchases to guard against future prices rises and delays in the delivery of goods from suppliers.
Vendor performance continued to deteriorate at the start of 2018. Average supplier delivery times lengthened to a marked extent, albeit slightly less so than before the turn of the year.
UK manufacturers maintained a positive outlook.