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Thursday 03rd of March 2011
March 1, 2011    

UK manufacturing activity holds record high in February

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by Kay Murchie

The Chartered Institute of Purchasing and Supply (CIPS)/Markit manufacturing purchasing managers’ index (PMI) has today revealed UK manufacturing activity held its record high in February.

The record level was attributed to higher factory costs, indicating pricing pressures are growing.

The closely-watched CIPS/Markit manufacturing PMI remained at 61.5 in February - which represents the highest reading since records began in 1992 and exceeded forecasts of 61.

Furthermore, the index continues to stay above the crucial 50 mark, which indicates expansion, where it has been for 19 consecutive months.

However, the level suggests the Bank of England will need to lift interest rates in order to tame stubbornly high inflation - which currently stands at double the 2% target.

Rob Dobson, senior economist at Markit, comments: “Input cost and output price inflationary pressures remain elevated, which may raise a further eyebrow amongst the members of the Bank of England’s Monetary Policy Committee.”

Meanwhile, growth of employment hit a new series record high rate, while output prices grew at the second-fastest pace since the survey commenced.

Manufacturing accounts for around 13% of economic output.

Construction activity and service sector activity figures will be published later this week.

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