-Vicky Redwood, chief U.K. economist at Capital Economics
British manufacturing activity rose at the fastest rate in eight months in March, signalling the UK economy has been keeping its momentum. Markit research group said the UK manufacturing PMI climbed to a seasonally adjusted 54.4 in the reported month, compared with 54.1 in February and overshooting economists' expectations for an increase to 54.3 points. The index remained above the important 50-point threshold, i.e. in the expansion territory, for the 24th straight month. Growth of production and new orders accelerated, whereas production costs continued to decline. The report also showed exports improved in March as demand from overseas rise modestly. The average rate of job creation in the manufacturing sector has reached 5,000 a month. The data came a day after a report showed the UK economy grew more than initially estimated in the fourth quarter as consumers and exporters ensured Britain's longest streak of uninterrupted expansion since 2008.
Even though the UK economy is gathering steam, the Bank of England has said it will keep the benchmark interest rate at a record low as it monitors the implications of the decline in the inflation rate to zero. Markit added that in March, there was a "substantial decline" in factory input prices, driven by cheaper oil and a stronger Sterling.
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