The survey out on Wednesday suggested Britain's economy continues to expand at a solid rate after outpacing its rivals past year, with the PMI's gauge of factory output pointing to the fastest growth since May 2014.
The Markit's Purchasing Managers' Index (PMI) declined from a two-and-a-half year-high of 56.1 in December to 55.9 last month, marking the sixth consecutive month of expansion and in line with analysts' expectations.
NBS statistician Zhao Qinghe said the readings in January had remained at a high level since 2012, which pointed to steady expansion of the manufacturing sector. "Greater production needs encouraged companies to purchase more inputs, but failed to generate jobs in the sector", a press release from Nikkei said.
"This does present some risks to the resilience of the United Kingdom market later this year, in addition to the risks from further sharp swings in exchange rates and a shift in gears in global growth", said EEF Chief Economist Lee Hopley. However, pre-production inventory fell as new orders were obtained.
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United Kingdom manufacturing output expanded in January for the sixth straight month, as expected, but price pressures intensified with input cost inflation surging a record high. The index stood at 51.3 points, indicating a slower growth when compared to the 57.6 points in the month of December 2016. "Domestic demand faltered the last time producers increased prices this quickly in 2011, and we doubt that this time will be different", he said.
The healthy expansion came despite a record increase in input prices, as inflationary pressure continues to build following the devaluation of sterling since the vote to leave the EU.
IHS Markit forecasts a 6.9% rise in GDP for FY16, with growth anticipated to accelerate to 7.4% in FY 2017.
"The Indian manufacturing economy recovered from the one-off downturn that hit the sector in December following the withdrawal of high-value banknotes", said Pollyanna De Lima, economist at IHS Markit. More new business and new export orders supported the increase in activity, helped by the recent depreciation of the euro and signs of improving global market demand.