- Rob Dobson, economist at data company Markit
British manufacturing growth accelerated in July, recovering from the lowest level in more than two years in June. According to Markit Economics, UK manufacturing PMI rose to 51.9, up from 51.4 in June, whereas economists had forecast 51.5. Nevertheless, the reading remained below the average of 54.3 the sector has had since April 2013. British factories struggle as the Pound's strength, which has gained 10% versus the Euro this year, and the economic weakness in the Euro zone weigh on demand from overseas. The pace of growth of new order dropped to 52.2, the lowest level since September 2014. In addition to that, the data showed prices paid by manufacturers for raw materials declined in July following a rise a month earlier for the first time since August 2014. However, factory gate prices climbed to the highest level in almost a year. The central bank expected inflation to increase swiftly towards the end of 2015 as last year's decline in global oil prices filters through the numbers. Yet, official data showed British inflation slid back to zero in June. While the British economy is gaining momentum, risks from the external environment mean the Bank of England is likely to maintain interest rates at a record low this week. Market participants will now be waiting for both the construction and services PMI data before a slew of data due on Thursday this week, when the central bank releases its rate announcement, the Monetary Policy Committee minutes, and quarterly forecasts all at the same time.
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