Published: Sat, September 02, 2017
Global | By Maureen Mccoy

United Kingdom manufacturing hit a four-month high in August

United Kingdom manufacturing hit a four-month high in August

Data compiler IHS Markit said its final purchasing managers' index rose to 55.8 in August from 54.9 in July, unchanged from a preliminary estimate.

That's up from 51.1, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

New contracts predominately came from the domestic market, although exports remained strong, if down on July's near-record high.

In China, the private Caixin/Markit survey showed new business grew at the strongest pace in more than three years in August.

Sterling - which is around 13% lower than its pre-referendum level against the dollar - has been a key driver of the resurgence in the United Kingdom manufacturing sector since last June, and that remained the case in August, IHS Markit said.

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IHS Markit´s manufacturing PMI gauge reached a four-month high of 56.9 for August, an improvement on the 55.1 registered for July. Following the GST launch, new orders and output dropped for the first time since the downturn in December a year ago post demonetisation. "The drop in the output index indicates that manufacturing could act as a drag on the economy in the third quarter, with exports dampening order book growth". The currency's depreciation also contributed to purchase-price gains accelerating for the first time in seven months, though at a slower pace than seen at the start of the year.

Both output and the new orders sub-index on the PMI survey also soared in August, which boosted hiring activity to gather steam.

"Overall operating conditions of the manufacturing sector improved further as market demand strengthens, but if prices rise too quickly the profitability of companies in the middle of a supply chain may be under pressure", Caixin's chief economist Zhengsheng Zong said.

Japan's economy expanded by a much stronger-than-expected annualized rate of 4.0 percent in April-June, the fastest in more than two years.

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