Market News & Analysis

UK manufacturing sees best month in over a year

Research has revealed that the UK's manufacturing industry saw its best month in over a year during October.

According to the Markit/CIPS data, the UK manufacturing Purchasing Managers' Index (PMI), came in at 55.5 per cent. That's up from 51.8 per cent in September and any figure over 50 suggests expansion.

This result was much better than what had previously been expected and indicated the highest reading since June 2014. It was also one of the fastest rises since the survey began.

Steel industry crisis

The PMI saw improvement despite difficulties in the steel sector during October.

Since September, some 5,000 jobs have been lost or put at risk after announcements by Tata Steel and SSI UK.

Gareth Stace, director of UK Steel, told a business, innovation and skills select committee hearing that time was not on the industry's side. "Time is rapidly running out and the steel industry needs assurances from government that it is going to deliver on its promises," he explained.

Pound increases

Following the release of the PMI survey, the value of the pound went up one-fifth of a per cent against the euro and two-fifths of a per cent against the US dollar.

Since the manufacturing sector has contracted in the last two quarters, meaning that by the normal definition, it is in recession. According to official figures from the Office for National Statistics, the industry contracted by 0.3 per cent in the third quarter and 0.5 per cent in the second quarter.

However, Rob Dobson, senior economist at Markit has said the results could be indicative of further growth during the rest of the year.

"The revival provides a tentative suggestion that the manufacturers are pulling out of their recent funk, having been dogged by recession since the start of the year, and may help boost economic growth in the fourth quarter," he said

"The big question now is whether this bounceback is a one-off or the start of a sustained re-emergence from recession," he added.

From time to time, GAIN Capital Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.