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December: A golden month for UK manufacturers

04 January 2011

It may have been snowing outdoors but the economy was warming up nicely for UK manufacturers in December, according to The Chartered Institute of Purchasing & Supply's activity index

The survey revealed the activity index jumped to 58.2 in December, up from 57.5 in November, according to a report from the BBC.

''Any reading above 50 indicates growth, and it's the 17th month in a row the index has remained over this level,'' said the BBC. ''However, firms' costs also rose at a record rate, and there's concern the data could add to pressure for the Bank of England to raise interest rates.''

But the story isn't all good news. Input costs rose at their fastest in the 19-year history of the survey, and the steepest price rises were reported in the food and drink sectors among others.

The BBC reported Rob Dobson, senior economist at Markit and author of the report, saying: "The UK manufacturing sector saw a truly spectacular end to 2010.

"The latest data are consistent with manufacturing production rising at a quarterly rate close to 2%, which should generate a meaningful contribution from the sector to economic growth in the fourth quarter to offset likely weakness in other sectors."

* The CIPS survey is produced with financial information services company Markit

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