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UK manufacturing growth accelerates unexpectedly in Oct: Markit
[LONDON] British manufacturing activity expanded at the fastest rate in three months in October but weak demand from the eurozone sent export orders tumbling at the fastest pace since January 2013, a survey showed on Monday.
The Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) rose to 53.2 from 51.5 to touch its highest level since July, confounding expectations for a reading of 51.2 in a Reuters poll of economists.
Growth in new orders rose from September's 17-month low to its highest since July thanks to increased demand in the domestic market.
But policymakers may be perturbed to see new export orders falling at the fastest pace in 21 months. Minutes from the Bank of England last month showed most of its rate setters were concerned about the euro zone economy.
Still, PMI compiler Markit said the survey augured well for British economic growth in the last three months of this year.
"Although the pace of expansion remains below that seen at the start of the year ... it is positive to see the sector break its recent sequence of slower growth," said Rob Dobson, senior economist at Markit. "However, this was partly offset by a further drop in new business from overseas, as exporters were hit by a near-stagnant eurozone economy and a relatively strong euro-sterling exchange rate."
The PMI underlined the lack of inflationary pressure in Britain's economy. Factory gate prices rose at the weakest pace in 16 months, reflecting lower raw material costs and stronger competition, while input prices fell for the second month.
Britain's factories hired at a slower rate than in September, with the rate of job creation the second-weakest since last June.