The S&P Global/CIPS UK manufacturing Purchasing Managers' Index rose to 47 in January, up from a preliminary January reading of 46.7 and from a 31-month low of 45.3 in December but still below the 50 level that separates contraction from growth.
This was up from a preliminary January reading of 46.7 and from a 31-month low of 45.3 in December but still below the 50 level that separates contraction from growth.Weak demand from clients at home and abroad plus strong price inflation and a shortage of raw materials and staff all weighed on production. Brexit and port problems hurt exports while demand from China was particularly weak, S&P Global said.
However, there were signs that the worst of the inflation surge has passed with cost increases slowing. Pressures on supply chains lessened and optimism rose to its highest level since April 2022.The Bank of England is weighing up how much higher it should raise interest rates to stamp out the risks that inflation, currently above 10%, gets stuck above its 2% target. It is expected to raise its Bank Rate tomorrow to 4% from 3.5%.
But the Bank of England must also avoid putting too much strain on the economy which the International Monetary Fund expects to be the only one in the Group of Seven rich nations to shrink this year. Finance minister Jeremy Hunt plans to announce measures to increase growth in his March 15 budget statement but he has ruled out significant tax cuts for now.
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