UK manufacturing growth accelerates

LONDON (SHARECAST) – Manufacturing activity grew more than expected in October, new data from the research group Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) shows.

The Markit/CIPS purchasing managers index (PMI) rose to 54.9 from 53.5 in September. A reading above 50 indicates expansion.

“An improvement in the UK Manufacturing PMI for the first time since May’s 15-year high will provide reassurance that manufacturing remained a driver of UK economic growth at the start of the final quarter,” said Markit senior economist Rob Dobson.

“Rates of expansion in output and new orders strengthened following the sharpest gain in new export orders for five months, with the export performance of intermediate and investment goods producers especially robust.”

The better than expected data comes the week after figures showed the economy grew by 0.8 percent in the third quarter of 2010, which was ahead of expectations.

“Evidence that manufacturing activity was very decent in October reinforces belief that the Bank of England’s Monetary Policy Committee are unlikely to vote for a revival of Quantitative Easing at their November meeting which ends on Thursday,” said Howard Archer, chief European & UK economist at the country analysis and forecasting group IHS Global Insight.

“Meanwhile, it remains odds-on that they will keep interest rates down at 0.5 percent even though Andrew Sentance will undoubtedly argue that latest data supports his case for a small rise in interest rates.”