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UK factories report stronger activity in October - IHS Markit

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UK factories report stronger activity in October - IHS Markit

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By David Milliken LONDON, Nov 1 (Reuters) – - British manufacturers reported robust growth last month and rising inflation pressures, adding to the chances that the Bank of England will raise interest rates on Thursday for the first time in a decade. The IHS Markit/CIPS manufacturing purchasing managers’ index (PMI) rose to 56.3 in October from an upwardly revised 56.0 in September. This was above its long-run average and bucking economists’ forecasts in a Reuters poll for a slight fall. “UK manufacturing made an impressive start to the final quarter of 2017 as increased inflows of new work encouraged firms to ramp up production once again,” said Rob Dobson, a senior economist at IHS Markit, which compiled the data. “The domestic market remained strong, whereas new export orders increased at a slightly slower pace, the latter showing signs of being hit by the recent strengthening of sterling,” Dobson said. British manufacturers enjoyed their strongest growth this year in the three months to the end of September, data showed last week, and Dobson said the sector appeared to be continuing to expand at a quarterly rate of around 1 percent. The economy overall enjoyed only lacklustre growth in the third quarter, expanding by 0.4 percent to give its weakest year-on-year growth in four years. Nonetheless, most economists polled by Reuters expect the BoE to raise interest rates for the first time in a decade on Thursday, increasing Bank Rate to 0.5 percent from a record low 0.25 percent. Central bankers are likely to be concerned by signs of strengthening inflation pressures in the PMI survey. Manufacturers reported that raw material costs were rising by the most since March, and in turn they were increasing the prices they charged customers at the fastest rate since April. Headline consumer price inflation reached a five-year high of 3.0 percent in September, and the cost of raw materials rose 8.4 percent on the year, according to official data.

((Reporting by David Milliken; Editing by Hugh Lawson); ((david.milliken@reuters.com; +44 20 7542 5109; Reuters; Messaging: david.milliken.thomsonreuters.com@reuters.net)))
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