Activity in both the manufacturing and service sectors in China expanded in August, indicating stable growth in the world’s second largest economy.
Advertisement
“This better-than-expected data followed a stellar Retail Sales print last month, and sent the pound a cent higher against the dollar”.
City analysts have already been adjusting their outlooks for a post-referendum slump on the back of indicators showing household spending has held up well.
Manufacturing, which accounts for 15 per cent of the United Kingdom economy, had been the most resilient of the three PMIs in the aftermath of Brexit.
The closely watched Markit/CIPS manufacturing survey, which measures activity in factories, jumped from a 41-month low of 48.3 in July immediately following the referendum vote to a 10-month high of 53.3 in August.
By contrast, British manufacturing staged one of its sharpest rebounds on record in August. A stabilisation of production volumes was offset by the steepest drop in new orders for four months.
Manufacturing production grew at the fastest pace in seven months.
Companies reported solid inflows of new work from both domestic and export sources, the latter aided by the sterling exchange rate.
Renewed rand weakness in the final week of August, if sustained, means upward cost pressure could return in coming months, Barclays said.
Input price inflation hit a five-year high.
An official measure of manufacturing activity in China rebounded in August to its strongest level in almost two years on improving production and demand, the government said Thursday, boding well for the world’s second-largest economy.
Mr Dobson also said that inflation was “raising its ugly head”.
Export orders were unchanged in August at 52.5, indicating growth in exports for the sixth consecutive month.
He said the sharp improvement in sentiment calls into question the Bank of England’s decision to cut interest rates from 0.5% to 0.25% at the beginning of August.
Among a raft of recent better than expected data, GfK’s United Kingdom consumer confidence Index for August, published yesterday, showed a five point jump to minus 7, a sharp rebound from July’s survey which showed confidence had suffered its sharpest monthly drop in more than 26 years in the wake of the Brexit vote.
Advertisement
Even though the manufacturing industry is a much smaller part of the US economy than it once was, the fact that it’s cyclical in nature means the sector is highly scrutinized as a bellwether. The data will boost confidence that the European Union referendum will not have a sustained negative impact on manufacturing, although the construction and services-sector reports will be crucial for the overall economic outlook.
