British manufacturing activity expanded at the fastest pace in sixteen months during October as output and new order growth accelerated, lifting hopes that the sector can gain momentum in the final three months of the year.
The seasonally adjusted Purchasing Managers’ Index climbed notably to 55.5 in October from 51.8 in September, figures from the Chartered Institute of Procurement & Supply and Markit Economics showed Monday.
Economists had expected the index to fall slightly to 51.3 from September’s originally estimated score of 51.5.
A reading above 50 indicates expansion in the sector. The latest pace of growth was one of the steepest registered during the 24-year survey history.
“Based on historical comparisons, the survey is consistent with a quarterly rate of growth of around 1 percent, a vast improvement on what we have seen in recent months,” Rob Dobson, a senior economist at survey compilers Markit, said.
The big question now is whether this bounce back is a one-off or the start of a sustained re-emergence from recession, Dobson noted.
With the manufacturing sector having slipped back into technical recession, today’s figures offer some hope that the sector may now have passed the worst, Ruth Miller, an economist at Capital Economics, said.
However, a few more upbeat surveys have to be seen before a renaissance in U.K. manufacturing can be declared, the economist said.
Official data last week showed a slowdown in the U.K. economy. Growth eased to 0.5 percent in the third quarter from 0.7 percent a quarter ago.
October’s growth was driven by solid improvements in the rates of growth in output and new orders, Markit said. Both output and orders increased at the sharpest rates since the middle of 2014.
New export orders gained further helped by improved intakes of new work from clients in the Middle East, East Asia and the USA.
Employment level in the sector climbed for the thirtieth successive month in October, as improved new order intakes and efforts to clear backlogs of work encouraged firms to raise capacity.
On the price front, input cost deflation was slightly slower in October from the previous month, mainly due to ongoing reductions in global commodity prices. This resulted further decrease in selling prices during the month.
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