"UK manufacturing made a strong start to the new year, continuing the robust upsurge in production seen at the tail end of 2013"
- Rob Dobson, senior economist at survey compilers Markit
It seems that Mark Carney's forecasts are working very well, taking into account the fact he predicted a slight deceleration of economic growth in the coming months, even despite the fact the economy is building up steam in general. Hence, it was not a surprise that manufacturing PMI surprised markets to the downside, though still being significantly above the crucial level of 50.
The headline data produced by Markit showed the gauge of activity in the manufacturing sector– one of the key pillars of the U.K. economy, slowed to 56.7 last month from 57.2 in December, however, still being far above the average level of 51.3. Analysts, however, expected a reading of 57.1. Nonetheless, the increasing number of new orders points to more strength ahead for British factories. The pace of growth in new export orders stood at the three-year high over the period amid stronger demand from North America, Europe, Asia, Scandinavia, the Middle East and Brazil.
While manufacturing sector accounts for around 10% of the overall economic output, market's reaction was very impressive, even though not immediate, with the cable falling to 1.6323, the lowest since January 17. On Wednesday, however, the pair can recover, as activity in the key services sector is projected to improve significantly.
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