UK manufacturing maintained strong start to 2011, resulting in further survey record job creation

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Key points:
UK Manufacturing PMI held steady at January's survey peak.
Growth of employment hit a new series record high rate.
Output prices rose at second-fastest pace in survey history.

Rob Dobson, Senior Economist at Markit and author of the Markit/CIPS Manufacturing PMI, commented: "The UK manufacturing sector maintained its strong start to the year in February. The PMI held steady at a series record high, while growth of output, new orders and exports were all among the fastest since the survey began. A jobless recovery would be a weak recovery, so it is positive to see jobs growth hit a fresh record high. However, the strong performance of the sector, which makes up 13% of UK GDP compared to 52% for non-government services, can only partly offset the weaker parts of the economy such as services and construction.

"Consumer and intermediate goods producers saw survey record output growth. The main worry was a sharp slowdown in the capital goods sector, which may bode badly for the health of investment spending. The latest data also confirm that 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."   
David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, added: "Strong growth in demand across the manufacturing sector continued to put breath in the sails of the UK economy in February.   This was the case at home as well as overseas leading to record increases in output and in turn to more jobs being created.  This is positive news given last week's surprise downward revision of official GDP numbers.

"The fly in the ointment remains macro-level inflation which is likely to go from bad to worse due to the unrest in Libya and escalating oil prices. Purchasing managers reported raw materials costs were continuing to rise at historically high levels during February, leading many to pass on higher purchasing costs to their clients.

"Textiles & Clothing and Chemicals & Plastics felt the most severe impact of higher input costs during February; and one of the challenges for the forthcoming Budget will be finding ways of supporting these relatively high performing industries through a period of uncertainty.

"So, in all, good news is out there for some but there's still a difficult path for others."

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