Global output rises at a record speed
MANUFACTURING around the world surged powerfully ahead last month, but inflationary pressures also picked up speed heightening fears that central banks would be forced to begin hiking interest rates.
Britain’s closely watched Markit/CIPS monthly purchasing mangers’ index rose to 62 for the first month of 2011, up from 58.7 in December – the highest reading since the survey began in 1992. The PMI has remained above the 50.0 mark that marks expansion from contraction throughout the past year-and-a-half boosted by a 25 per cent fall in the pound.
The rise, higher than economists had expected, shows that manufacturing is growing at an annualised pace of 2.5 per cent a year, according to Capital Economics. “It brings forward the risk of a rate rise sooner rather than later, and brings February into play as a possibility,” said Ross Walker, economist at RBS.
But economists yesterday said that the equivalent PMI data for the services sector on Thursday – which accounts for 75 per cent of GDP compared to the manufacturing’s 13 per cent – would be the key consideration for the BoE.
Meanwhile, data from the US showed its manufacturing sector grew at its fastest pace in nearly seven years in January, The Institute for Supply Management’s key index climbed to 60.8 in January, the highest reading since May 2004 and well above analysts’ expectations, while its employment index reached its highest level since April 1973.
In Europe, the Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI), which records manufacturing activity across all the major euro area economies, rose to 57.3 in January from 57.1 in December.
In China, official PMI fell to a five-month low in January, but was likely distorted by the closure of factories ahead of China’s Lunar New Year.