Extending the trend seen since June 2016, manufacturers indicated a further rise in production in January. The rate of growth accelerated to the sharpest in twelve months. Where increases in output were reported, panellists generally linked this to more favourable economic conditions and higher inflows of new work.
Greater domestic and foreign client demand underpinned the largest rise in total new orders since January 2017. New business from abroad registered one of the largest gains seen over the past year and a half.
For the thirteenth month running, vendor performance deteriorated as capacity pressures at suppliers led to longer lead times. Purchasing activity rose at the quickest rate since September 2014, stretching supply chains, and pre-production inventories accumulated at the fastest pace in twelve months.
The latest rise in input costs largely stemmed from greater raw material prices and higher transport costs. Although the rate of inflation was marked, it dipped slightly to a three-month low. Conversely, output charge inflation accelerated to the secondhighest since September 2014.
Higher new orders contributed to a further rise in backlogs of work in January. The level of outstanding business at manufacturing firms increased at the fastest rate since October 2015. Staffing numbers also grew strongly, with a number of panel members linking payroll growth to greaterbusiness activity and improved future output expectations.
Business confidence among goods producers remained robust in January, despite dipping to a three-month low. Panellists commonly attributed optimism to more favourable market conditions and sustained rises in output and new orders.