Last week, the ONS came along and ruined the party. Its data said the UK expanded by a mere 0.1 per cent in the final quarter. In other words, the UK crawled out of recession.

Some say it just goes to show how weak the economy is. But others, instead, said that by the time the ONS has finished revising the data, we will probably find that actually the UK grew quite robustly.

 The main evidence to suggest that the official data is wrong comes from CIPS and Markit, with their monthly indices tracking manufacturing and services. Yesterday saw the release of the latest Purchasing Mangers Index tracking manufacturing. Recently this has been looking good. What did the index do in January, and does it provide more evidence that, despite what the ONS data says, the UK is actually doing pretty well?

Well, The Purchasing Managers Index from CIPS/Markit hit 56.7 from an upwardardly revised 54.6 in December, to record its highest level since October 1994.

The headline PMI – which provides a single figure indication of operating conditions in the manufacturing sector – has now remained above its no-change level of 50.0 for four consecutive months.

Significantly the month saw the steepest growth in new export orders since data was first collected at the start of 1996. And of course the cheap pound helped, or so the survey found. Gains in overseas business reflected new contracts from Asia, the Eurozone, Latin America, the Middle-East and the US.

The thing about manufacturing is that it is very reliant on the inventory cycle. Stock had got so low that is was inevitable new orders would begin to flow. It’s a trend that has occurred throughout the world.   That’s why the US enjoyed such high growth in the last quarter. And the reason why the UK is not growing as fast as other economies at the moment is because manufacturing makes up a smaller part of the economy, therefore we are not enjoying the same benefit from the turn in the inventory cycle. Even so, with a pick up like this in the index you would expect growth to have been much higher than the ONS data says.

Later this week the CIPS/Markit index for services will be out.  This has been looking good recently too. If the trend in this index is anything like the trend we have seen in manufacturing, then we have to start facing up to the possibility the ONS data is almost irrelevant.