Brexit provides welcome boost for UK manufacturing figures

While the Brexit decision has been blamed for rising costs within the UK as a result of falling sterling values, it has been good news for UK manufacturing, according to latest figures.
The respected purchasing managers’ index (PMI), from Markit/CIPS showed manufacturing standing at 54.3 for the last month.
That was down from the September figure of 55.5, but still above the 50 mark, which Markit says shows that expansion is taking place.
The news was not so good for businesses relying on imports, however, with the vast majority of firms reporting an increase in import costs citing the exchange rate as the reason.
Rob Dobson, a Markit economist said the new figures showed that UK manufacturing remained on a “firm footing” as a sector during October and he predicted a return to growth during the fourth quarter of the current financial year.
He added that even though there was a slowdown in comparison to September, the growth of output and new orders continued to “defy expectations, rising at marked rates and supporting the fastest job creation in a year.
The main talking point of the latest PMI survey, however, was the impact to business of the falling value of the pound.
While the boost to competitiveness has driven new export orders, the weaker currency is causing the biggest increases in purchasing costs to manufacturing firms in the UK ever recorded by the survey in its 25-year history.
Mr Dobson said the survey was a further pointer towards an expected stick in interest rates.
The Bank of England is set to meet later this week to announce latest interest rate figures, although it is widely believed that, as the British economy is performing better than expected following the Brexit vote, interest rates will remain at 0.25 percent.
Mr Dobson predicted: “If signs of ongoing solid output expansion and rising price pressures are also experienced elsewhere in the economy, the chances of a further cut in interest rates before year-end are virtually nil.”
Latest figures put together by the Office for National Statistics showed that the UK economy grew by 0.5 per cent over the three months from July. While that was a fall from the 0.7 per cent levels in the previous quarter, it was stronger than the 0.3 per cent which had been pessimistically predicted.