Anecdotal evidence suggested that greater domestic demand was a key driver of manufacturing growth at the end of the year. A number of firms also cited efforts to boost operating capacity at their plants, which led to the steepest rise in payroll numbers since September 2014.
Business optimism picked up for the third month running in December. The degree of positive sentiment was also the strongest since January 2016. Survey respondents widely commented on hopes of a sustained upturn in sales volumes over the year ahead, supported by new product launches and investment in additional plant capacity.
Meanwhile, higher prices for raw materials resulted in the strongest rate of input cost inflation since December 2012. There were signs that manufacturers had absorbed part of the rise in average cost burdens, as highlighted by a slower increase in factory gate charges in December.