British manufacturers reported robust growth last month and rising inflation pressure, an industry survey showed, adding to the chances that the Bank of England will raise interest rates on Thursday for the first time in a decade.
The HIS Markit/CIPS manufacturing purchasing managers’ index (PMI) rose to 56.3 in October from an upwardly revised 56.0 in September. That exceeded its long-run average and bucked economists’ forecasts in a Reuters poll for a slight decline.
“UK manufacturing made an impressive start to the final quarter of 2017 as increased inflows of new work encouraged firms to ramp up production once again,” said Rob Dobson, a senior economist at HIS Markit, which compiled the data.
“The domestic market remained strong, whereas new export orders increased at a slightly slower pace, the latter showing signs of being hit by the recent strengthening of sterling,” he said.
Sterling is still down more than 10 percent from its level before Britain voted to leave the European Union in June 2016, but Barclays banker Mike Rigby said his clients would be wary of further gains after Thursday’s BoE decision.
“Although demand from both home and overseas markets remains robust, manufacturers will have half an eye on what the Monetary Policy Committee decides to do tomorrow,” he said.