UK manufacturing PMI in January rose to its highest in 9 months

Business activity in the manufacturing sector in the UK in January has stabilized after the decline during the greater part of 2019, said research organization IHS Markit.

the Index of purchasing managers (Purchasing Managers Index, PMI) for the manufacturing sector in January increased from December’s level of 47.5 points to 50 points, reaching a maximum of nine months. A preliminary assessment was 49.8 points.

a reading below 50 points reflect reducing activity, a higher activity. PMI was last exceeded 50 in April 2019.

a Decisive victory of the Conservative party of Prime Minister Boris Johnson in the December elections has reduced political uncertainty.

This led to a slight recovery in new orders and business confidence, as well as to the stabilization of production volumes, Markit said IHS. However, external demand remained a deterrent, as new export orders fell for the third month in a row.

the unemployment rate in January remained virtually unchanged after the reduction of jobs in the past nine months.

meanwhile, the level of business optimism rose to its highest in eight months. 47% of producers expect that production volumes in the coming year will increase.

“the Improvement was mainly observed due to the growth in consumer demand and the resumption of purchases of raw materials by enterprises, which suggests that the decline in uncertainty after the elections has prompted households and businesses to increase spending,” said IHS Director of Markit Rob Dobson.

while the risk of a “hard” Brexit has decreased, the impact on trade in the end of the year remains possible. Johnson insists that the transitional period after the British exit from the European Union is due to expire December 31, 2020, regardless of whether he will be able to negotiate a trade agreement with the EU before that time.