Pound Falls As UK Factory PMI Rises Less-than-expected

Oct 03, 2017, 02:19
Pound Falls As UK Factory PMI Rises Less-than-expected

The Philippines last month managed to land second place in Southeast Asia behind Vietnam in terms of growth of manufacturing activity, but the improvement was its second weakest since its inclusion in January a year ago in the survey IHS Markit conducts for Nikkei, Inc. Any reading above 50 indicates growth.

The measure of new orders rose to 54.9 from 54.4, with firms citing increased client demand and product development.

The pound was trading 0.7 per cent lower against the dollar, at $1.3306, in early trading, after IHS Markit's purchasing managers' index (PMI) for the manufacturing sector slid by a point in September, to 55.9.

Meanwhile, the pace of job creation eased to the weakest since October 2016.

"Exports remain a bright spot, however, still rising at one of the strongest rates over the past six-and-a-half years".

Growth in the manufacturing sector slowed last month as costs for factories increased sharply, according to a closely watched survey.

"On balance, the continued solid progress of manufacturing and export growth is unlikely to offset concerns about a wider economic slowdown, but the upward march of price pressures will add to expectations that the Bank of England may soon decide that the inflation outlook warrants a rate hike", said Rob Dobson, Director at IHS Markit.

"This is also happening alongside rising commodities prices, which are contributing to inflationary pressures across the supply chain. How will both cost and currency challenges affect lead times and production capacity?"

"By assessing and working to manage the currency risks posed by these key market influences, manufacturers can plan for rising costs and take steps to minimise their impact on the business".

"The survey data pointed to further slowing in output growth and a modest sales trend while employment shrank again as firms indicated sufficient manpower to meet production demand", he added. Respondents also reported a rare spike in exports of construction-related products for emergency relief and reconstruction in the U.S. following recent hurricane damage.

In August, Poland's PMI inched up to 52.5 from 52.3 in July.

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