U.K. Factory Price Pressures Intensify as BOE Decision NearsBy
Report shows solid hiring, costs rising for companies
Manufacturing PMI advanced to 56.3 in October from 56
U.K. manufacturing strengthened in October and measures of prices and capacity indicated an inflationary buildup within the industry.
IHS Markit said costs rose and firms increased selling prices at the fastest pace in six months. A measure of hiring jumped to the highest in more than three years and there were “capacity pressures” in the supply of raw materials, it said.
The survey’s headline manufacturing activity index rose to 56.3 from 56 in September, far above the key 50 level and better than economists had forecast. The pound strengthened after the data, rising 0.2 percent to $1.3305 as of 9:31 a.m. London time.
The report comes a day before the Bank of England announces its latest policy decision, when it’s expected to increase interest rates from a record-low 0.25 percent. Governor Mark Carney has warned of a supply squeeze related to Brexit that will reduce potential growth and increase the risk of the economy overheating.
“Manufacturing made an impressive start to the final quarter of 2017,” said Rob Dobson, director at IHS Markit. “The continued robust health of manufacturing and rising price pressures will help cement expectations of the Bank of England hiking interest rates for the first time in a decade.”
The BOE will announce its policy decision at noon on Thursday. Markit will publish its gauge of services, the largest part of the economy, a day later. It’s forecast to have slipped slightly in October, to 53.3 from 53.6.
— With assistance by Ainhoa Goyeneche, and Harumi Ichikura