Propelled by strong production and new order, the UK manufacturing segment began this year’s final quarter on a solid footing in October.

The Purchasing Managers’ Index, PMI, climbed to 56.3 in October from a previous 56.0 in September based on survey data showed on Wednesday by HIS Markit and the Chartered Institute of Procurement & Supply.

The PMI was predicted to keep on being unchanged at September’s original reading of 55.9. The headline index has now waved expansion for 15 sequential months.

Rob Dobson, director at HIS Markit, said, “The sector looks to be achieving a quarterly rate of expansion close to 1%, therefore sustaining the solid pace of growth signaled by the official ONS estimate for the third quarter.”

The economy grew at a quick pace of 0.4 percent in the third quarter after increasing 0.3 percent in the previous three months, ONS said.

Factory activities only make up a relatively small part of the British economy, James Smith, an ING economist, said.

The much bigger service sector is still struggling to look for momentum. Consumers continue to take a careful approach to flexible spending as the inflation remains outperforming wage growth, Smith said.

The PMI survey data depicted that production rose at an equal solid pace to that reported before the survey month.  The development was broad-based with all customers, middle and investment goods provider reporting result growth.


Moreover, new order intakes increased at a considerable rate in October, recuperating part of the growth momentum yielded in September. The local market was the main source of new contract wins. A continued increase was also observed from the new export business.

The labor market reported job formation for the fifteenth consecutive month driven by solid performance, with the pace of growth surging to a 40-month high.

Robust demand for raw materials headed to higher purchase prices. Input costs rose to the greatest extent in seven months, contributing to the sharpest increase in selling prices since April.

Meanwhile, according to the monthly data from Nationwide Building Society, the house prices rose at a quicker pace in October. House prices surged 2.5 percent year-on-year, after September’s revised 2.3 percent increase.

According to a report, house price inflation has split to 0.2 percent from 0.4 percent in September on a monthly basis. Nevertheless, this was the second successive increase in prices.

Strong rates of employment growth and low mortgage rates are giving some help for demand, but this is partly being counterweighed by pressure on household incomes, which seems to affect confidence, Robert Gardner, Nationwide’s chief economist, said.

Support to house prices also comes from the number of lack of homes in the market.

The percentage of borrowers directly affected by a rate increase will be smaller than in the past due to the fixed interest rates of the majority of mortgages.

The Bank of England is expected to increase its interest rate by a quarter point from a record low 0.25 percent and to maintain its asset purchase program at GBP 435 billion. The announcement is expected to be revealed on November 2.

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