United Kingdom factories grow stronger than expected in August

Ann Santiago
September 2, 2017

Production advanced at the steepest pace in seven months in August, driven by faster intakes of new work received.

The Markit/Nikkei Japan Final Manufacturing Purchasing Managers Index (PMI) inched up to 52.2 in August on a seasonally adjusted basis, less than a flash reading of 52.8 but just above a final 52.1 in July.

The latest PMI business survey showed both the output and new orders sub-indexes nudged back into expansionary territory, pushing the pace of hiring to the highest in nearly 4-1/2 years.

On the other hand, weakness in the construction sector weighed on the official non-manufacturing PMI, which retreated from 54.5 to 53.4, a 15-month low, Gambarini said - a poor omen for prices of steel and iron ore.

A reading of 50 reflects the breakeven measure between expanding and contracting activity.

"Overall operating conditions of the manufacturing sector improved further as market demand strengthens, but if prices rise too quickly the profitability of companies in the middle of a supply chain may be under pressure", Caixin's chief economist Zhengsheng Zong said.

Domestic demand was also strong, she said.

The closely watched Markit/CIPS UK Manufacturing PMI barometer of factory sentiment showed activity jumped to 56.9 last month from 55.3 in July, the second-highest level in more than three years.

The latest official data showed retail inflation rose 2.36 percent in July on an annual basis after easing for three consecutive months.

Higher demand forced firms to raise their staff numbers in August and the rate of job creation was the most marked in over seventeen-and-a-half years. Manufacturers' selling prices rose at a solid, yet slower, pace. "In addition, manufacturers' optimism regarding future production growth only edged up in August to its five-year average, suggesting that they will invest only cautiously in extra capacity".

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