--UK CIPS Jan manufacturing adjusted index seen 52.0
--UK CIPS Jan mfg export index seen 53.7 vs Dec rev 50.2
--UK CIPS Jan mfg output index seen 53.5 vs Dec rev 53.2
--UK CIPS Jan mfg input prices index seen 58.6 vs Dec rev 53.4

By BridgeNews
London--Feb. 1--Activity in the U.K. manufacturing sector picked up slightly in January and the sector is continuing to expand, according to the Chartered Institute of Purchasing and Supply (CIPS) manufacturing survey. The headline index was 52.0, above the key "break-even" mark of 50, supported by a continued expansion in output and a tightening of supplier delivery times.
* * * The output index rose to 53.5, from 53.2 in December, while suppliers' delivery times fell to 45.9 from 48.0 in December, implying a build-up in supply bottlenecks in the sector. But the pace of expansion in new orders fell back to 53.3 from 53.6 in December. Meanwhile manufacturing employment continued to fall, but at a lesser pace than in December with the index rising to 49.4 from 48.3.
The survey also showed that manufacturers appear to have benefited from the fall in the value of the pound against the euro in recent months, with the index for new export orders rising to 53.7 from 50.2 in December. However, price margins appear to still be under pressure with input prices rising to 58.6 from 53.4 in December.
Analysts said that despite the better performance in the manufacturing sector it did not alter their view that the Bank of England's Monetary Policy Committee would cut rates next week.
"It's slightly better than December, but not by much," said Deborah Read, economist at Bank of America. "We're still holding out for a cut." Philip Shaw, economist at Investec, said: "It adds a shred of doubt, but nonetheless our central view is that we believe that the inflation outlook is sufficiently benign to allow the MPC to cut rates by 25 basis points."
Shaw said that the big news from the CIPS survey was the bounce-back in the export sector. "It seems as if exporters are beginning to benefit from relative weakness in sterling. The big jump in export orders over the month is quite notable." However, Shaw said he was puzzled by the big jump in input prices since December. "We are at a loss really to explain that. CIPS quoted shortages of inputs and the inflationary impact of oil prices. We hope that is a lagged effect, because obviously the oil price has come down substantially even in sterling terms." End Copyright 2000 Bridge Information Systems Inc. All rights reserved.