The British manufacturing sector expanded at the fastest pace since mid-2014 on stronger growth in output and new orders, weathering uncertainty over the "Brexit" vote, survey data from Markit showed Monday.
The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose unexpectedly to 55.4 in September from 53.4 in August.
This was the highest score since June 2014. The reading was expected to fall to 52.1.
The rebound in the PMI level since the EU referendum-related low in July has been sufficient to make the third quarter average at 52.3, the best during the year-to-date.
"The rebound over the past two months has been encouragingly strong, and puts the sector on course to provide a further positive contribution to GDP in the third quarter," Rob Dobson, a senior economist at IHS Markit, said.
Scott Bowman at Capital Economics, who previously expected the economy to broadly stagnate, while some others expected a contraction in output in the third quarter, now predicts moderate expansion in GDP.
The robust September manufacturing purchasing survey seemingly further dilutes the case for the Bank of England to cut interests rates again this year, IHS Global Insight economist Howard Archer said.
Rates of expansion in output and new orders accelerated further, rising at rates rarely achieved since the middle of 2014.
The domestic market remained a prime driver of new business wins, while the weak exchange rate boosted orders from abroad.
At the same time, manufacturing output grew the most since May 2014, driven by the consumer goods sector. Intermediate and investment goods producers also reported substantial increases in output.
The recent rebound in the manufacturing sector encouraged companies to take on additional staff. Employment increased for the second straight month.
Purchasing activity also rose in September. Input buying volumes were lifted to one of the greatest degrees over the last two years.
On the price front, higher import costs, a by-product of the weak exchange rate, led to a further substantial increase in average purchase prices in September. And output price inflation remained well above the series average.
by RTT Staff Writer
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