Strong domestic demand saw U.K. manufacturing activity in October expand the most in three months, helping reduce the impact of weaker demand in the euro area.
Markit Economics reported that its Purchasing Managers’ gauge rose to 53.2 in October from 51.5 a month earlier. A measure above 50 is an indicator of growth. Economists surveyed by Bloomberg News had expected the index to drop to 51.4.
“The U.K.’s recovery will remain heavily dependent on domestic demand and services growth until euro-zone growth picks up again,” Rob Wood, a London-based economist at Berenberg, told Bloomberg. “With inflation low and downside risks to growth still significant, if lower than they were a month ago, the BOE faces little pressure to change monetary policy in the near-term.”
The final reading of the euro area’s manufacturing PMI was 50.6, up from 50.3 last month, which was the weakest in 14 months. Output in France and Italy contracted.
The index of new orders in the U.K. PMI touched 54.6, the highest level in three months, up from 50.3 in September. A measure of new export orders dropped the second month, due to weaker demand in China, U.S. as well as the euro area.
Meanwhile, U.S. manufacturing expanded faster than expected in October as strong domestic demand helped local factories stay afloat amid declining export orders.
The Institute for Supply Management’s manufacturing gauge appreciated to 59 last month, tying with August to record the strongest pace since March 2011. The measure stood 56.6 in September. Declining gas prices as well as the improving labor market is helping boost consumer spending, which accounts for about 70 percent of the U.S. economy. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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