Engine of recovery running low on steam
The NCB Purchasing Managers’ Index (PMI) found that firms continued to hire staff even as the rate of growth of the sector fell to its lowest in four months as the number of orders declined.
The NCB PMI found that the rate of growth had slipped to 51.4 in December from 52.4 a month earlier. The decline was put down to weak domestic demand and higher energy costs.
“As a result of the strength in exports, total new business grew again in December, albeit at the slowest rate since February,” said Philip O’Sullivan, chief economist at NCB Stockbrokers. “The underlying trends remain positive,” he said.
The sub-index measuring new orders fell to 50.9 from 51.9 in November, the lowest level since February, but it remained above the 50 line indicating that there was marginal increase in the total number of new orders.
Manufactures put the growth in new sales down to the recovery in the US economy, which is where the new orders are originating.
“New export orders were strong, expanding for a third consecutive month. New export orders have now grown in nine of the previous 10 months, with survey respondents citing strengthening demand from the US as a factor in December’s growth. As a result of the strength in exports, total new business grew again in December, albeit at the slowest rate since February,” said Mr O'Sullivan.
The cost of manufacturing increased sharply in December due to energy and fuel costs, forcing manufacturers to increase their prices, following a price cut in November.
In Britain factory activity jumped unexpectedly in December to grow at its fastest pace since September 2011.
The Markit/CIPS Manufacturing PMI rose to a 15-month high of 51.4 in December from an upwardly revised 49.2 in November — a far stronger increase than any predicted by economists.
“It was a pleasant start to the new year and I think it’s justified,” said Alan Clarke, UK economist at Scotiabank.
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