UK manufacturing activity rose to its highest level in more than two years in September, as the weak pound helped to cement the sector’s strongest quarter of growth this year, according to a closely watched survey.
The fall in the value of the pound following the EU referendum was the sector’s “prime growth engine” last month as new domestic and overseas orders and promotional deals boosted activity.
Survey compiler Markit said employment rose for the second straight month as companies took on new staff to cope with higher demand.
This was well above the 50 level that signals growth, and its highest level since June 2014.
Economists expected the headline reading to fall to 52.1 following a significant rebound in activity in August and after falling to a three-year low in July.
The survey compiler said the rebound in the headline PMI level since the Brexit vote was “sufficient to make the third quarter average of 52.3 the best during the year-to-date”.
Rob Dobson, senior economist at Markit, said the “strong” PMI reading suggested the sector was also on course to add to UK growth in the third quarter.
“The weak sterling exchange rate remained the prime growth engine, driving higher new orders from Asia, Europe, the USA and a number of emerging markets,” he said.
“The domestic market is also still supportive of growth, especially for consumer goods. Further step-ups in growth of new business and output in the investment goods sector may also be a sign that capital spending is recovering from its early year lull, in the short term at least.”
Source: The Telegraph