David Milliken

LONDON, (Reuters) – The British manufacturing sector grew the fastest in six months during January. This was due to global supply chain pressures starting to ease. Also, factories largely reacted well against a wave of Omicron coronavirus cases. A survey on Tuesday showed this.

CIPS/IHS Markit’s Purchasing Managers’ Indice (PMI) revealed that January saw an increase of 54.5 points. That is its highest point since July 2021. It was 53.6 points higher than December.

Factories were able to hire workers at the fastest pace in over 11 years. They also reported some relief from inflation pressures.

IHS Markit stated that “Although supply chains constraints continue to stymie economic growth, there were indications that they were past their peak,” which contributed to an easing of purchase price inflation.

Bank of England is expected to ease price pressures. They are likely to increase interest rates on Thursday due to high inflation fears.

In January, the headline PMI dropped to 57.3 from 57.9 from December. This is due to lower new orders and faster delivery by suppliers. A factor that can depress the index since in normal times, it’s a sign of excess capacity.

The economy of Britain only recovered its size pre-crisis in November. Many economists believe it has shrunk by 0.5% since December.

The Confederation of British Industry stated Sunday that its members believed private sector growth was at the lowest point since April’s three-months to January, when many companies were operating in lockdown.

But Tuesday’s PMI data showed some relief from the disruption in supply chains that contributed to consumer price inflation at its highest point in 30 years.

PMI revealed that input prices for manufacturers rose at a slower rate than April 2021 and output prices increased at a slower pace than May. Both price increases, however, are well below their long-term average.