Business

UK manufacturing sector returns to growth

Nissan production line in Sunderland
Image caption The figure was stronger than expected

The UK's manufacturing sector returned to growth in January, a survey has indicated, with overall activity at its highest level for eight months.

The purchasing managers' index (PMI) from Markit/Cips recorded a level of 52.1 last month, up from December's revised reading of 49.7.

A reading above 50 indicates the sector is expanding.

The survey found a sharp increase in output, a rise in new orders and a fall in costs faced by manufacturers.

New export orders continued to increase, and Markit/Chartered Institute of Purchasing & Supply (Cips) said companies had reported that UK customers were increasingly willing to spend.

"The UK manufacturing sector has sprung to life in the first month of 2012 to defy any economic gloom, but it is too early to say whether this trend is sustainable," said David Noble, chief executive at Cips.

Howard Archer from IHS Global Insight said: "This suggests that there is a very decent chance that the manufacturing sector will return to growth in the first quarter of 2012 after contributing significantly to overall GDP contraction of 0.2% quarter-on-quarter in the fourth quarter of 2011.

"However, whether or not the UK can avoid further contraction in the first quarter will depend mainly on what happens to services output and consumer spending."

The PMI figure for the service sector- which accounts for about 70% of the UK economy - will be released on Friday.

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