- Rob Dobson, senior economist at survey compilers Markit
Activity in the UK's manufacturing sector unexpectedly surged in October thanks to strong domestic demand, but export orders dropped again amid ongoing troubles in the neighbouring trading partner—the Euro zone. Markit/CIPS UK Manufacturing PMI came in stronger than predicted, with the main activity index rebounding to the highest level in three months in October. The index stood at 53.2, recovering from September's 17-month low of 51.5 and beating the consensus forecast for 51.4. The UK report showed manufacturing production rising for the 19th consecutive month, with strong increases in the consumer and intermediate goods sectors, and a solid gain for capital goods manufacturers. Demand from domestically based clients helped new business grow at the fastest pace for three months in a row.
Nevertheless, export orders fell for the second straight month, the survey showed, adding to other recent reports which indicated pressure on manufacturers from a flagging Euro zone, the UK's main export market. CBI analysts said that global political instability, growing concerns about the weakness in the Euro area and recent strengthening of the Sterling all weighed on export demand. Employment, however, in the sector continued to rise in October while price pressures remained "relatively subdued" with input costs falling for the second month running.
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