"The picture of waning inflationary pressures painted by industry may provide some leeway for the Bank of England to hold off from raising rates even if strong growth persists."
- Markit Economics in London
Production sector of the United Kingdom, which accounts for just more than 10% of country's economy, advanced at its slowest pace in September of this year since June 2013. The Purchasing Managers' Index, calculated by Markit Economics, dropped to 51.6 points last month, down from 52.2 points in August. Moreover, the subsequent index that measures new orders plunged to a 50.5 mark and approached a significant psychological level of 50 points, which separates growth from decline. Indicator for export orders plummeted as well.
Even though the U.K. economy is showing strong and stable development with many positive signs of further advance, analysts notice risks in face of weakening overseas environment, including stagnating economy of the Eurozone and Japan, slowing growth in China and the rest of developing countries. British GDP jumped a revised 0.9% in the second quarter, but economists see some parts of the economy to take a pause in the foreseeable future. Meanwhile, they are pointing on the Bank of England's policy and forward guidance, which shows some willingness of the regulator to start raising interest rates. Experts are underlying that the optimal option would be to wait until further improvement in the economy, unless such a supportive monetary policy does not create risks in terms of price stability and volatility on the housing market.
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