London - The swift upturn in British factory activity eased slightly in January but orders from home and abroad flooded in at a faster rate, a survey showed on Monday, boding well for Britain's economy at the start of the year.
Markit's UK Manufacturing Purchasing Managers' Index (PMI), a survey of more than 600 industrial companies, slipped to 56.7 in January from December's downwardly revised 57.2, slightly short of analysts' expectations for 57.0.
Keen for Britain's economic recovery to reduce its reliance on consumer spending, policymakers have taken heart from rising factory output in recent months.
While the PMI hit a three-month low, it was still far above the survey's long-run average of 51.3, suggesting the economy got off to a strong start in the first quarter.
“Although the pace of output expansion has cooled slightly in recent months, growth is still tracking at one of the highest rates in the 22-year survey history,” said Rob Dobson, senior economist at PMI compiler Markit.
“The domestic market remains the main pillar of the rebound, pushing the rate of expansion in total new orders back towards last November's 19-year record.”
Dobson added that the long-awaited rebalancing of economic growth may finally be within sight, with the demand from abroad rising at one of the fastest rates recorded in the survey.
The new export orders index rose to 57.5 in January from December's 54.4, its highest level since February 2011. Markit said factories cited improved demand from North America, Europe, Asia, Brazil and the Middle East.
Employment in manufacturing rose for the ninth straight month albeit at a slightly slower rate than in December.
The unemployment rate in the three months to November fell to within touching distance of the Bank of England's 7.0 percent threshold at which it will review interest rates, although policymakers have said rate hikes are not imminent.
The bank meets this week to set policy. Although economists expect no change in rates on Thursday, the decision will be watched closely in case it makes a statement about its forward guidance plans.
Manufacturing accounts for around a tenth of Britain's economy, which expanded by 0.7 percent in the final three months of last year, data showed last week.
Official industrial and manufacturing output data for December are due on Friday. - Reuters